Trading Wisdom

“When I get hurt in the market, I get the hell out. It doesn’t matter at all where the market is trading. I just get out, because I believe that once you’re hurt in the market, your decisions are going to be far less objective than they are when you’re doing well… If you stick around when the market is severely against you, sooner or later they are going to carry you out.” – Randy McKay

“Frankly, I don’t see markets; I see risks, rewards, and money.” – Larry Hite

“The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance.” – Ed Seykota

Markets can stay irrational for longer than you can stay liquid.

So lets say you wanted to risk it and opened a trade and your margin level was 105%. You hoped that as you made profit your margin level will slowly grow but then the market became irrational and started moving against you.

Your margin level started dropping to 90% then 70% then 50% and your broker sent you a margin call warning you to deposit some more money or close some losing trades.

You refused and hoped the tide will change and your trade will become profitable, but the market stayed irrational and kept moving against you till your margin level fell to 20% which happened to be your brokers stop out level.

Your trade was closed forcefully by the broker and your account balance nearly wiped out. This story is a a reminder that the market can stay irrational for longer than you can stay liquid.

“When I became a winner, I said, ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.’” – Marty Schwartz

“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.” – Victor Sperandeo

“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected. “– George Soros

“If you personalize losses, you can’t trade.” – Bruce Kovner

“Don’t focus on making money; focus on protecting what you have.” – Paul Tudor Jones

“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected. “– George Soros

“I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have” – Paul Tudor Jones.

capital preservation

“The goal of a successful trader is to make the best trades. Money is secondary.”

— Alexander Elder