Exceptional extracts from Trading Books - Golden Information

Trading Discussion
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For those of you that take the time to read educational books, be them online or physical copies, I would like you to all post your favorite extracts which really made you think about FX trading. From time to time, I come across little snips of information or commentary from such books which genuinely do make me smile.

I’ll kick off the thread - feel free to post anything you like.

  • "Make no mistake about it, when you step into any market, including the
    forex market, and decide that you want to make money, you have decided
    you will outwit and outperform some of the most determined, intelligent,
    and well-resourced people in the world. All these impressive people have
    one goal: to take your money."

-Naked Forex - Alex Nekritin & Walter Peters, phd

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Nice thread idea James :slight_smile:

From the great Edward de Bono, the father of lateral thinking:

"Dealing with complexity is an inefficient and unnecessary waste of time, attention and mental energy. There is never any justification for things being complex when they could be simple.”

Apt for trading, don’t you think?:wink:

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Absolutely - In fact I’m sure it can be applied to almost every walk of life. For some reason, which I still haven’t decided on after all these years, I don’t know why people come into this career with the immediate intent and desire to become ‘complex’. I suppose it links back to my quotation above? When you know for a fact that you’re against the smartest and most experienced people in the world it becomes natural to ‘over-think’ everything.

The reality is that as I progressed through my own learning curve I went from complex to as simple as possible - there are more than enough variables in this game already!

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@RISKonFX

Because they spend too much time reading threads on Babypips :grin:

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Got one by Barry Le Platner. This quote is referenced many times within the turtle community

Good judgement comes from experience, and experience comes from bad judgement.

Think it’s self explanatory.

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“Jim Rogers said it perhaps most colorfully, ‘I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime’. In essence, by not wanting to trade, I had inadvertently transformed myself into a master of patience. By forcing myself to wait until there was a trade that appeared so compelling that I could not stand the thought of not taking it, I had vastly improved the odds.” - from New Market Wizards.

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Avoiding loss should be the primary goal of every investor. This does not mean that investors should never incur the risk of any loss at all. Rather “don’t lose money” means that over several years an investment portfolio should not be exposed to appreciable loss of capital. While no one wishes to incur losses, you couldn’t prove it from an examination of the behavior of most investors and speculators. The speculative urge that lies within most of us is strong; the prospect of free lunch can be compelling, especially when others have already seemingly partaken. It can be hard to concentrate on losses when others are greedily reaching for gains and your broker is on the phone offering shares in the latest “hot” initial public offering. Yet the avoidance of loss is the surest way to ensure a profitable outcome.

  • from Margin of Safety by Seth Klarman
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100% true. Thank you for sharing

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Nobody tells a day trader what to do, or when to do it. unlike most people, day traders are their own boss, they call the shots, and there is nobody to report to each day but themselves…well… except
maybe our wives & husbands :grinning:

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Ahhh, I think you’ve just paraphrased the definition of everyones ‘dream’, right :wink:

Surely that’s the only reason we are all interested in this game, and that’s a good enough reason for me too!

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TRIGGER WARNING

Snowflakes Beware

Elder Ahead

The goal of a successful trader is to make the best trades. Money is secondary.
Alexander Elder

Beginners focus on analysis, but professionals operate in a three dimensional space. They are aware of trading psychology their own feelings and the mass psychology of the markets.
Alexander Elder

Amateurs look for challenges; professionals look for easy trades. Losers get high from the action; the pros look for the best odds.
Alexander Elder

The market does not know you exist. You can do nothing to influence it. You can only control your behavior.
Alexander Elder

To be a good trader, you need to trade with your eyes open, recognize real trends and turns, and not waste time or energy on regrets and wishful thinking.
Alexander Elder

When a beginner wins he feels brilliant and invincible Then he takes wild risk and loses everything.
Alexander Elder

Successful trading depends on the 3M`s - Mind, Method and Money. Beginners focus on analysis, but professionals operate in a three dimensional space. They are aware of trading psychology their own feelings and the mass psychology of the markets. Each trader needs to have a method for choosing specific stocks, options or futures as well as firm rules for pulling the trigger - deciding when to buy and sell. Money refers to how you manage your trading capital.
Alexander Elder

Remember, your goal is to trade well, not to trade often.
Alexander Elder

Most private traders on a losing streak keep trying to trade their way out of a hole. A loser thinks a successful trade is just around the corner, and that his luck is about to turn. He keeps putting on more trades and increases his size, all the while digging himself a deeper hole in the ice. The sensible thing to do would be to reduce your trading size and then stop and review your system.
Alexander Elder

Losers bring money into the market which is necessary for the prosperity of the trading industry.
Alexander Elder

Every winner needs to master three essential components of trading; a sound individual psychology, a logical trading system and good money management. These essentials are like three legs of a stool – remove one and the stool will fall, together with the person who sits on it.
Alexander Elder

Many traders ride an emotional roller coaster and miss the essential element of winning: the management of their emotions.
Alexander Elder

The markets are unforgiving, and emotional trading always results in losses.
Alexander Elder

Traders lose because the game is hard, or out of ignorance, or lack of discipline or because of both.
Alexander Elder

The Ever Respecting Dr Elder VIPER

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Those are great quotes Viper. Very insightful.

Thanks for sharing.

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This is the one new traders fear the most.

“The mental baggage from childhood can prevent you from succeeding in the markets. You have to identify your weaknesses and work to change. Keep a trading diary—write down your reasons for entering and exiting every trade. Look for repetitive patterns of success and failure.”
― Alexander Elder,

The Ever Ridding Myself Of Mental Baggage VIPER

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Would I be correct in saying that you have a fond liking for Alexander Elder, TradeViber? :slight_smile:

Personally, I like the above and have to agree - a noticeable difference that also occurred in my own trading.

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Read all of his stuff, he is a real MD Psychiatrist, and he does not spend a lot of time patting you on the back. It is like, “Identify the problem, and correct it”. My kind of learning.

The Always Learning VIPER

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There should definitely be a quote doing the rounds that reinforces that speculating on the markets is not for everyone - far to many are fooled into thinking that you can learn this from a text book and chart time. The unfortunate truth is, from my point of view anyway, you need to have the right mentality, mind and risk taking drive. Sure others may disagree with me saying this, but these attributes are ‘wired’ into you, they can’t be taught, period. You ether thrive in this game and understand exactly what is required, or you’re going to fail. I see no need to sugar coat this up, do you? Also, understanding what is required is only half of the battle, if you don’t have the mindset and naturally driven instinct to be curious then I definitely think that these participants are already at a greater disadvantage than those who do have ‘what it takes’.

Just like some careers suit others and not the remaining folks. I’m all up for helping others, should they ask, but that in no way guarantees success.

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Years ago, there was a guy named Don Johnson, this was in the 90’s and 2ks. He had a web site dedicated to alerting the unwary to the fact that if you day trade you will lose all of your money, I remember this because his logic was impeccable, except for the exceptions. Here in the US if a person blows out their account they really shouldn’t be mad, they should be grateful that they had the opportunity to participate in this endeavor. When I blew up my futures account, I called the broker/sell side guy, “hey listen, I am hemorrhaging money here, time to shut it down” He was surprised that I took it so well. I told him that I was grateful to have participated, he said he wished all of his clients had the same attitude. Truth be told I should have stayed with the QQQQs, but live and learn. Risk, I think you are right, genetics or something, but whatever it is, some have it some don’t. But I think everyone should take a try, you never know. By the way it’s not THAT Don Johnson, or the one who was recently sent to jail.

The Ever Respecting Dr Elder VIPER

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