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Trading is the art of making timely decisions, without letting emotions get in the way. Pick the brains of the pros to improve your strategy.
There are many self-proclaimed experts in the field of trading, then there are some whose results speak louder than words. When those traders and investors do speak up, it pays to, well, pay attention. Here are some gems from the world’s leading traders to help you in your trading journey.
The famous quote by the pioneer of indices, after whom the Dow Jones Industrial Average is named, emphasises the importance of not letting a few wins get to your head. Traders must never stop asking questions and learning from the markets. The ability to remember that price movements are only a confirmation that your speculation was correct, rather than markets moving according to what you predicted, is imported for staying grounded as a trader.
Paulson explains the importance of putting money into a trade only after one has their expenses sorted. Trading is risky and no trader should risk more capital than they can afford to lose. Trading is an opportunity to grow your capital, but the cost should not be your peace of mind or meeting your daily expenses.
Livermore correctly predicted the crashes of 1907 and 1929. He shorted the entire stock market before the Great Depression, booking profits that would be valued at $1.4 billion today.
The man who broke the Bank of England attributes his success as a trader to his habit of constant vigilance and improvisation in the trading strategy within his trading plan. He brings to the fore that the only constant in the financial markets is change and to accommodate that, traders must be ready to adjust their trading goals, plan, risk tolerance, capital involved, and trading timings with the changing market conditions.
The ambitious businessman and founder of Tesla said this after he purchased Bitcoin for the first time. He wanted people to realise that it is important to dive into the financial markets and take risks if the goal is to be a trader. You cannot learn to swim without getting wet, and losses are a part of the learning process, whether assets are digital or traditional.
Paulson explains the importance of putting money into a trade only after one has their expenses sorted. Trading is risky and no trader should risk more capital than they can afford to lose. Trading is an opportunity to grow your capital, but the cost should not be your peace of mind or meeting your daily expenses.
Paulson was among the few who got the timing right after realising that the real estate bubble was nearing a burst. He heavily shorted credit default obligations (CDOs) after pursuing the banks to issue credit default swaps (CDSs). And he made millions of dollars!
The famous psychiatrist and trader used his knowledge of psychology to master the art of reading market sentiment to make trading decisions. He emphasises the need to keep your focus on making each trade successful, without stressing about making money, as that may cloud judgment and force irrational decisions.
The American investor emphasises the need to keep your trading strategy simple and manageable. Using too many indicators and complex data analytics only increases the time taken to make decisions. And, in the financial markets, agility is important. Also, the more factors you add into your trading strategy, the more things there are to possibly go wrong.
Timing is essential to make the right entry and exit decisions. The trader and technical analysis guru stressed the need to study the markets and understand time cycles. It helps traders understand why markets top or bottom out at certain points. He reiterated that the most volatile periods occur right around the end of a cycle and are the ones that yield the best returns.
Overtrading comes with an opportunity cost, says the US investor and financial commentator. Patience is key to identifying and entering only the trades that help you meet your financial goals. A trader who waits for the most favourable trade setups is already set to take advantage of the inefficiencies in the market.
Following the long bearish run of the commodities market in the 1990s, Rogers anticipated that paper assets would lose their worth, but commodities would ultimately trend upward. He still stands by his opinion!
Whether a success or failure, it has lessons for you. Traders must track the performance of their strategies and identify what works for them. It helps them recognise their shortcomings and improvise accordingly. According to the famous commodities and futures trader, performance, longevity, and consistency are the essential qualities of a successful trader.
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