The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management

“Markets need a fresh supply of losers just as builders of the ancient pyramids needed a fresh supply of slaves. Losers bring money into the markets, which is necessary for the prosperity of the trading industry.”

“An astute trader aims to enter the market during quiet times and take profits during wild times.”

“Being simply “better than average” is not good enough. You have to be head and shoulders above the crowd to win a minus-sum game.”

“So far, the only people who've made money from trading systems are their sellers.”

“The answer is to draw a line between a businessman's risk and a loss. As traders, we always take businessman's risks, but we may never take a loss greater than this predetermined risk.”

“It is hard enough to know what the market is going to do; if you don't know what you are going to do, the game is lost.”

“To help ensure success, practice defensive money management. A good trader watches his capital as carefully as a professional scuba diver watches his air supply.”

“To win in the markets, we need to master three essential components of trading: sound psychology, a logical trading system, and an effective risk management plan.”

“People trade for many reasons—some rational and many irrational. Trading offers an opportunity to make a lot of money in a hurry. Money symbolizes freedom to many people, even though they often don't know what to do with it.”

“Why do most traders lose and wash out of the markets? Emotional and mindless trading are big reasons, but there is another. Markets are actually set up so that most traders must lose money. The trading industry slowly kills traders with commissions and slippage.”

“There are good trading systems out there, but they have to be monitored and adjusted using individual judgment. You have to stay on the ball—you cannot abdicate responsibility for your success to a mechanical system.”

“The mental baggage from childhood can prevent you from succeeding in the markets. You have to identify your weaknesses and work to change. Keep a trading diary—write down your reasons for entering and exiting every trade. Look for repetitive patterns of success and failure.”

“The New Sell & Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines (John Wiley & Sons, 2011).”

“A loser's true problem is not account size but overtrading and sloppy money management. He takes risks that are too big for his account size, however small or big. No matter how good his system may be, a streak of bad trades is sure to put him out of business.”

“Use limit orders almost exclusively—except when placing stops. Be careful on what tools you spend money: there are no magic solutions. Success cannot be bought, only earned.”

“The public wants gurus, and new gurus will come. As an intelligent trader, you must realize that in the long run, no guru is going to make you rich. You have to work on that yourself.”

“Professionals expect prices to fluctuate most of the time, without going anywhere far. They wait until an upside breakout stops reaching new highs or a downside breakout stops making new lows. Then they pounce—fade the breakout (trade against it) and place a protective stop near the latest extreme point. It's a tight stop, and their monetary risk is low, with a big profit potential from prices returning towards the middle of the congestion zone.”

“En realidad, encuentro que el porcentaje de inversores exitosos es mayor entre las mujeres. Como grupo, tienden a ser más disciplinadas y menos arrogantes que los hombres.”

“People deceive and play games with themselves. Lying to others is bad, but lying to yourself is hopeless.”

“An intelligent businessman takes only risks that will not put him out of business, even if he makes several mistakes in a row.”

“Comience a llevar un diario: un registro de todas sus operaciones, con las razones para entrar y salir de éstas. Busque patrones repetitivos de éxito y de fracaso. Aquellos que no pueden recordar el pasado están condenados a repetirlo. El”

“la mayoría de personas disfrutaba de seguir al líder. Les liberaba de la obligación de pensar por sí mismos.”

“Airlines pay high salaries to pilots despite having autopilots. They do it because humans can handle unforeseen events. When a roof blows off an airliner over the Pacific or when a passenger jet loses both engines to a flock of geese over Manhattan, only a human can handle such crises. These emergencies have been reported in the press, and in each of them, experienced pilots managed to land their airliners by improvising solutions. No autopilot can do that. Betting your money on an automatic system is like betting your life on an autopilot. The first unexpected event will make your account crash and burn.”