"Awareness" Quotes and Snippets

I have taken some time off recently from visiting FF, because I was noticing an abundance of SYSTEM related posts, and little else in terms of content. Since systems alone do not directly impact an individual’s ability to become a successful trader, I felt that it was time to try a different angle. Please don't misunderstand me on this, all the good folks here that have shared their systems are to be commended. I personally couldn't see myself spending as much time as they do maintaining their threads by continuously answering hundreds (and sometimes thousands ) of questions, writing E-books, and generating forward test results. Thanks for that, it is appreciated.

However, the 95% and the 5% are still on the opposite sides of the fence. The systems are of little use to those who seek them the most, because those who seek them the most lack a certain self - awareness. Having said that, I'd like to invite FF users to post useful quotes and snippets from various sources (books, magazines, personal experience, etc.), which they feel exemplify some of this much needed "awareness" (consciousness).

I'll kick it off with one of my favorites, and will do my best to keep posting as I find and remember others in the future. Please pitch in if you've got some goodies to share.

Taken From:
THE NEW MARKET WIZARDS (CONVERSATIONS WITH AMERICA'S TOP TRADERS)
By: JACK D. SCHWAGER
.

Interview with Victor Sperandeo:

Schwager – “You almost seem to be implying that intelligence is an impediment to successful trading. How would you explain that?”

Sperandeo – “Assume that you're a brilliant student who graduates Harvard summa cum laude. You get a job with a top investment house, and within one year, they hand you a $5 million portfolio to manage. What would you believe about yourself? Most likely, you would assume that you're very bright and do everything right. Now, assume you find yourself in a situation where the market is going against your position. What is your reaction likely to be? "I'm right." Why? Because everything you've done in life is right. You'll tend to place your IQ above the market action.

To be a successful trader, you have to be able to admit mistakes. People who are very bright don't make very many mistakes. In a sense, they generally are correct. In trading, however, me person who can easily admit to being wrong is the one who walks away a winner.

Besides trading, there is probably no other profession where you have to admit when you're wrong. Think about it. For example, consider a lawyer who, right before a big case, goes out with his girlfriend and stays up half the night. The next day, he's drowsy and inadequately prepared. He ends up losing the case. Do you think he's going to tell the client, "I'm sorry, I went out last night and stayed up too long. If I were sharper, I would have won the case. Here's your money back." It will never happen. He can always find some excuse.

He would probably say something like, "I did the best I could, but the jury was biased." He will never have to admit he was wrong. No one will ever know the truth except him. In fact, he'll probably push the truth so far into his subconscious that he'll never admit to himself that his own actions caused the loss of me case.
In trading, you can't hide your failures. Your equity provides a daily reflection of your performance. The trader who tries to blame his losses on external events will never learn from his mistakes. For a trader, rationalization is a guaranteed road to ultimate failure.”

Bird watching in Lion Country
By DIRK DU TOIT


It’s not just about the trading
The idea for this book sprang from my years as a trader and later a mentor to people with little or no trading experience. I was trading my system successfully but more often than not I couldn’t seem to transfer the know-how to some of my students. No matter how hard I tried, some just didn’t make the grade. They weren’t necessarily wiped out financially, just confused, low on enthusiasm, perplexed by the unbearable lightness of it all. After a while I realized that certain repetitive mistakes were being made, and repeated. Often those mistakes were not even directly related to trading, and that was why I was not picking them up. Most beginners have absolutely no clue as to what “successful” means. While they also understand that trading is a serious occupation, a “business”, they still lack a clear goal, a business plan, an implementation strategy and methodology. Most just rush in, hoping to find some system that will allow them to “spot successful trades”.

forget where i read this one but for some reason i thought of it, dont really know why. its loosely paraphrased.

'a perennial financial problem is the debasement of money as a cheap way of financing the state's debts.'

The Science of Getting Rich
By Wallace D. Wattles

"There is a science of getting rich, and it is an exact science, like algebra or arithmetic. There are certain laws which govern the process of acquiring riches, and once these laws are learned and obeyed by anyone, that person will get rich with mathematical certainty. The ownership of money and property comes as a result of doing things in a certain way, and those who do things in this certain way - whether on purpose or accidentally - get rich, while those who do not do things in this certain way - no matter how hard they work or how able they are - remain poor. It is a natural law that like causes always produce like effects, and, therefore, any man or woman who learns to do things in this certain way will infallibly get rich."

Not sure I grasp this... can you explain your interpretation please?

I'm guessing it has to do with fiat currencies and Central Banks... the fact that since the early 70's, virtually all currencies are based on how much money is produced by leveraged debt.

"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." -- Kenneth Boulding, economist

Sure, you can compound 10% a month into mega-millions in less than a decade, but at some point, you're going to hit a liquidity ceiling, and you can't compound anymore. This is why you can make large returns with small money, but the best billion dollar hedge funds return a "measly" 20-30% a year.

"The aim of the archer is not the center of the target, but the center of himself." -- Zen in the Art of Archery, Eugen Herrigel

I think this can be applied to trading as well.

Thanks for the explanation Buddha.

I was thinking we could focus this thread a bit more on individualized awareness and consciousness, as pertaining to developing as a trader. Less in regards to general market.

Thanks for the input.

ok, in the context of your thread, think of the trader as the state in relation to desire for profit, leverage, and the rising importance of derivatives.

Everything you need to know about trading can be learned from Kenny Rogers:

"Every gambler knows: the secret to survival / is knowin' what to throw away, and knowin' what to keep." (cut off your losers, and let the winners run)

"'Cuz every hand's a winner, and every hand's a loser." (every trade can go with you or against you)

"You've got to know when to hold 'em..." (stay in the market when it is going your way)

"...know when to fold 'em." (exit the market when it's not going your way to limit your loss)

"Know when to walk away..." (take the day off if you've had a string of bad trades. Can also mean "quit while you're ahead")

"...and know when to run." (abandon your system if it continuously fails)

"You never count your money, when you're sittin' at the table..." (don't worry about unrealized P/L... watching every tick is why newbies jump in or out of the market too quickly)

"...there's a time enough for countin', when the dealin's done." (worry about how much money you made or lost after you exited your trades).


-- Lyrics from The Gambler

lol you see sonny you can make a life out of reading peoples faces and so forth

great post!

dont know what can add here. so here goes

"What seperates criminal from "bad" criminal is that they are smart."

"If hippie can think lot of things, what chind of people governament has in ther pocket"

"you are only as smart as your dumbest mistake"

-ralph vince

(although he is not one of my favorite trading authors, i always loved this quote)

"a man can excuse his mistakes only by capitalizing them to his subsequent profit"

- Jesse Livermore

hmm, just realized i have an obsession with mistakes!! LOLOL

FROM: The first Market Wizards book

Marty Schwartz - Champion Trader

"Schwartz spent a decade losing money on his trading before he found his stride as a remarkably successful professional trader. During his earlier years, he was a well-paid securities analyst, who, as he describes it, was always broke because of market losses. Eventually, he changed his trading methodology, in the process of transforming himself from a repeated loser to an amazingly consistent winner. Not only has Schwartz scored enormous percentage gains in every year since he turned full-time trader in 1979, but he has done so without ever losing more than 3 percent of his equity on a month-end to month-end basis."

George Soros Quotes


“Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes"

“The worse a situation becomes the less it takes to turn it around, the bigger the upside.”

"The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market.”

"The absurdity of its illegality has been clear to me for some time. I learned about pot from my kids and realized it was a lot better than Scotch, and I loved the Scotch. Then I went to my doctor, and he said, 'I'm thrilled. You're drinking too much. You're much better off doing pot than drinking.'”

Trading Recipe

Take the obvious, add a cupful of brains, a generous pinch of imagination, a bucketful of courage and daring, stir well and bring to a boil.

Bernard Baruch

Never Chase A Trade

You never need to chase a trade. The market has plenty of opportunities. The money runs out before the opportunities do.

John Saleeby

Exiting Too Late

If you beat yourself up about exiting too early, you set yourself up to exit future trades too late.

David Nassar

True Acceptance Of Risk

When you've achieved a state of mind where you truly accept the risk, you won't have the potential to define and interpret market information in painful ways.

Mark Douglas

A Peculiar Balance

Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake.

Michael Steinhardt

Swallow Your Pride And Get Out

The best traders have no ego. To be a great trader, you have to have a big enough ego in the sense that you have confidence in yourself. You cannot let ego get in the way of a trade that is a loser; you have to swallow your pride and get out.

Tom Baldwin

Emotional Makeup Is More Important

I haven't seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few aren't. Many outstanding intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.

William Eckhardt

Respect But Not Fear

It's important to distinguish between respect for the market and fear of the market. While it's essential to respect the market to assure preservation of capital, you can't win if you're fearful of losing. Fear will keep you from making correct decisions.

Howard Seidler

The Current Risk/Reward

Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on.

Bill Lipschutz

For Psychological Reasons

The real reason so few succeed in trading is because the traits required for success are almost exclusively psychological.

Gary Smith

A Wonderful Company At A Fair Price

It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

Warren Buffett

Stay With Your Winners

If you don't stay with your winners, you are not going to be able to pay for the losers.

Michael Marcus

The Future Is Never Clear

You know the prose: "Maintain buying reserves until current uncertainties are resolved" etc. Before reaching for that clutch, face up to two unpleasant facts: the future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long term values.

Warren Buffett

Selling Too Soon

I never buy at the bottom and I always sell too soon.

Baron Rothchild

Behave Rationally

The market is there only as a reference point to see if anybody is offering to do anything foolish. When we invest in stocks, we invest in businesses. You simply have to behave according to what is rational rather than according to what is fashionable.

Warren Buffett

Don't Get Emotionally Attached

If you feel too good when things are going well, then inevitably you will feel too bad when they are going poorly.

Richard Dennis

High Probability Trades

Never confuse high probability with infallibility.

Darryl Guppy

Purely Academics

To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses - How to Value a Business, and How to Think About Market Prices.

Warren Buffett

Follow Your Rules

As a trader it is more important to know that you will always follow your rules than it is to make money, because whatever money you make, you will inevitably lose back to the markets if you can't follow your rules.

Mark Douglas

Cutting Back Size When In Losing Streak

When you are in a losing streak, your ability to properly assimilate and analyze information starts to become distorted because of the impairment of the confidence factor, which is a by-product of a losing streak. You have to work very hard to restore the confidence, and cutting back trading size helps to achieve the goal.

Bill Lipshutz

hehe!