Ignore hearsay and don’t let your ego get the better of you.
“I learned that an opinion isn’t worth that much. It is more important to listen to the market.”
“Most traders who fail have large egos and can’t admit that they are wrong. Even those who are willing to admit that they are wrong early in their career can’t admit it later on! Also, some traders fail because they are too worried about losing. I’m not afraid to lose. When you start being afraid to lose, you’re finished.”
Timing is paramount.
“I don’t lose much on trades, because I wait for the exact right moment.”
Accept full responsibility for your actions and don’t fall prey to self-sabotage.
“Many people actually want to lose on a subconscious level.”
“The realization that you are responsible for your results is the key to successful investing. Winners know they are responsible for their results; losers think they are not.”
Dr. Van K. Tharp
Stay flexible in your decision making.
“Your strategy has to be flexible enough to change when the environment changes. The mistake most people make is they keep the same strategy all the time. They say, “Damn, the market didn’t behave the way I thought it would.” Why should it? Life and the markets just don’t work that way.”
Patience trumps passion.
“If you make 50% two years in a row and then lose 50% in the third year, you would actually be worse off than if you just put your money in a money market fund. Wait for something to come along that you know is right. Then take your profit, put it back in the money fund, and just wait again. You will come out way ahead of everybody else.”
James B. Rogers, Jr.
Just in case you didn’t pay attention the first time – leave your ego at the door!
“I used to try to will things to happen. My attitude was that I figured it out, therefore it can’t be wrong. What is the ultimate rationalization of an investor in a losing position? “I’ll get out when I’m even.” I became a winner when I was able to say, ‘To hell with my ego, making money is more important.'”
Don’t fall prey to the sunken-cost fallacy.
“I tend to cut bad trades as soon as possible, forget them, and then move on to new opportunities. The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you follow these three rules, you may have a chance.”
This one speaks for itself.
“Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose.”
“All I think the leading cause of financial disablement is the belief that you can rely on the experts to help you. Investing requires an intense personal involvement.”
And last but by no means least…
“I have a cousin who turned $5,000 into $100,000 in the option market. One day I asked him, “How did you do it?” He answered, “It is very easy. I buy an option and if it goes up, I stay in, but if it goes down, I don’t get out until I am at least even.” I told him, “Look, I trade for a living, and I can tell you that strategy is just not going to work in the long run.” In his next trade he put his money in Merrill Lynch options, only this time, it goes down, and down, and down. It wiped him out.”
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