Success in trading is not a game of luck but requires years of experience. We have compiled a list of great tips from the top 10 investors and billionaire masterminds from around the world.
1. Jesse Livermore
“Do not anticipate and move without market confirmation—being a little late in your trade is your insurance that you are right or wrong.”
Livermore is the author of “How to Trade in Stocks.” In 1929, he was worth more than $100 million, which is almost $1.5 billion to $13 billion, depending on the index you use. He is still famous in the trading chat rooms for making some of the best stock market trading decisions in the history of US Stock Market. His fortune swelled to a whopping $100 million after he sold the stocks right before the market crashed in 1929. His mantra was to play the market only when the factors were favorable. He was a low-frequency player, who studied and truly understood the pulse of the market and other traders.
2. Ed Seykota
“In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading.”
Seykota converted a meager $5,000 investment into an unbelievable $15,000,000 in his client account. In the early 70s, he designed and standardized a commercial programmed trading system. He was the first one to emphasize the price action patterns and chart patterns in the trade market. Seykota’s success came from an intense focus on patterns.
3. Richard Dennis
“Trading has taught me not to take the conventional wisdom for granted. What money I made in trading is testimony to the fact that the majority is wrong a lot of the time. The vast majority is wrong even more of the time. I’ve learned that markets, which are often just mad crowds, are often irrational; when emotionally overwrought, they’re almost always wrong.”
Dennis was the “Prince of the Pit,” who made $200 million from $1600 in a decade. He founded the Turtle Traders, a 21 member group that went on to redefine the idea of traders. Richard Dennis and William Eckhart appointed 21 average people and taught them the tricks of the trade. They proved to everyone that success is not something you are born with; anyone can succeed with the right training and mentors.
4. Paul Tudor Jones
“Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.”
In 1986, Jones predicted the cataclysmic crash of the US stock market. As a result, he made as much as $100 million from the 1987 Black Monday crash. It is one of the largest US stock market decline in a single day. While hundreds of people suffered from the crash of their fortunes, Tudor Jones walked away with millions in his pockets. He offers a very realistic piece of advice to all traders—to walk away from an account that is bleeding money. Sometimes, you’ve just got to cut your losses.
5. George Soros
“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.”
Soros is the Oracle of the stock market. He invested $10 billion on single currency trade in 1992. His profit on the transaction reached an incredible $2 billion. He is still the “man, who broke the Bank of England.” George Soros is a great example of market iconoclasts, who are not afraid to play against the odds, even when the whole world says otherwise. You’ve just gotta go with your gut.
6. Jim Rogers
“Acknowledge the complexity of the world and resist the impression that you easily understand it. People are too quick to accept conventional wisdom, because it sounds basically true and it tends to be reinforced by both their peers and opinion leaders, many of whom have never looked at whether the facts support the received wisdom.”
Jim Rogers co-founded Quantum Fund with George Soros. He has made his billion-dollar empire patience and calm decision making. His trading principles are old school. He does not believe it is crucial for traders to pay attention to the bulk they are trading. It is alright to trade less than your competitors and wait for the one opportunity of a lifetime.
7. Stanley Druckenmiller
“I believe that good investors are successful not because of their IQ, but because they have an investing discipline. But, what is more disciplined than a machine? A well-researched machine can make many average investors redundant, leaving behind only the really good human investors with exceptional intuition and skill.”
George Soros hired Druckenmiller in 1988 to take charge of the Quantum Fund from Victor Niederhoffer. He also made over a billion dollar of profit from shorting British Pound Sterling in 1992. He teaches the aspiring traders that it is alright to have a few losers in the portfolio. A true trader always focuses on the overall risk to reward ratio.
8. John Paulson
“Stock market goes up or down, and you can’t adjust your portfolio based on the whims of the market, so you have to have a strategy in a position and stay true to that strategy and not pay attention to noise that could surround any particular investment.”
John Paulson rose to fame in 2007, when he decided to bet against the mortgage-backed securities. He made a profit of over $4 billion personally, and that convinced the world that he was one of the greatest traders in history! Well, he wasn’t wrong. The simplicity of his trading principle: always buy low and sell high.
9. Ray Dalio
“I learned that if you work hard and creatively, you can have just about anything you want, but not everything you want. Maturity is the ability to reject good alternatives in order to pursue even better ones.”
Raymond Ray Dalio is a hedge fund manager, philanthropist, and a billionaire. He has made the 2018 top 100 world’s richest people list by making the correct investment decision every time. According to Dalio, young traders lose money because they have “an ego sensitivity.” Trading with emotion often leads to losing trades and terrible investment decisions.
10. Warren Buffet
“Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”
There is no top 10 investor billionaire list where Warren Buffet does not feature. He is the “Oracle of Omaha”—one of the most successful traders of all times. He has given away $32 billion to charity (99% of his fortune). Buffet’s empire comes from a trading style which is all about waiting patiently for the right moment.