Here are a couple more quotes from two of the world’s greatest traders. In trading there is always more to learn and we should start by trying to learn from the best there is.
“Spend at least as much time researching a trading methodology as you would choosing a refrigerator” – Peter Lynch
I think this is where many novice traders make their first big mistake. They will buy a system on eBay for $99 and be so supremely confident that is going to make them a fortune that they immediately start trading it the very next day. They spend literally no time back testing, evaluating, questioning the systems prior performance or considering its underlying logic I think initially this is because people come into this business thinking that it is easy to make money from trading and therefore assume that all systems and methodologies work just fine. After few months people fairly rapidly realise that there is a little more to trading than simply fronting up $99. You certainly do not have to design your own trading methods but you absolutely must critically appraise them before you trade with real money. Time spent researching methodologies is one of the best investments you can make. It will save you thousands of pounds in unnecessary losses and may make you tens of thousands of pounds in profits.
!I measure what is going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am, so I bend” – Marty Zweig
The market is comprised of the distillation of all of the thoughts, analysis, hopes and fears of all of the market participants – so it is hardly surprising that it is smarter than you or I. Whilst it is true there are certainly some suckers participating in the markets it is still truer that many participants are well funded, extremely smart and hard-working. Consequently it is important to realise that yes the market really is smarter than us. It is for instance unwise to assume that a market that is going against you will see the “error of its ways” and reverse back in the direction you feel it should be going in. In the end this sort of thinking will wipe you – it is simply a matter of time. If the market is going up and you are short then you are wrong and should reverse your position and follow the market or at least exit with manageable loss. It has been said by many great traders including George Soros that the sign of a good trader is an individual that can constantly re-evaluate their own position and when necessary they can instantly turn on a sixpence and reverse positions. Successful traders do not become wedded to positions and have absolutely no problem accepting that they are wrong on occasions. We should not hold strong views and opinions and be more interested in making money than in being “right”,