I collect quotes that are insightful in their own right. Many may seem wholly unrelated to the trading world, so I add my perspective of how they can apply very helpfully. They’re organized into the three areas listed below. I always appreciate suggestions for more quotes to consider.
You know my method. It is founded upon the observation of trifles. – Sherlock Holmes
In my methodology, some of the smaller characteristics of a pattern can have much greater impact than the bigger developments that tend to attract mainstream analysis.
In skating over thin ice, our safety is in our speed. – Ralph Waldo Emerson
I was attracted originally to trading by its limited exposure to price fluctuation. No market environment is so stable that Emerson’s “thin ice” metaphor cannot apply. A military analogy describing the difference between trading and investing is a surgical air strike compared to a massive ground movement.
Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat. – Sun Tzu
Success is dependent upon more than one factor. Many traders have been laid low by mastering only one, with such “lucky” timing as to be profitable for a while. But eventually and inevitable, they are reminded that other factors can be impactful.
The greater the obstacle the more glory in overcoming it. – Moliere
This relates directly to support or resistance that is chipped away at over lengthy periods. Their break is not assured, but it is difficult to reverse from its break if achieved.
I skate to where the puck is going to be, not where it has been. – Wayne Gretzky
It’s not about the market agreeing with you. It’s about you being positioned in the market’s direction. Wow, deja vu.
Everyone has a plan, until they get punched in the face. – Mike Tyson
Waiting until that punch before making an alternative plan is far less helpful than already having one in mind. The alternative can be a stop, a stop-and-reverse, or a different pattern interpretation. Depending upon the punch’s effect, it can be adding to the position. The alternative plan simply has to exist prior to being punched, and preferably prior to being exposed to a punch.
As far as the laws of mathematics refer to reality, they are not certain, and as far as they are certain, they do not refer to reality. – Einstein
Perhaps the original version of Heisenberg’s indeterminacy principle. Plagiarism? Homage? I’m not above either when it comes to reminding us that some of history’s greatest minds knew better than to expect perfection while awaiting setups to trade.
Imperfect action is better than perfect inaction. – Harry Truman
Among other attributes, trading is requires us to make decisions, to pull the trigger, to execute. It is not coincidental that these are also elements of leadership. And from one of history’s strongest leaders comes a reminder to have confidence to act.
I have found that plans are useless, but planning is indispensable. – Dwight Eisenhower
The market is not concerned with our well thought out and practiced our strategies. Even when tracking perfectly, it will soon enough switch to an entirely different personality. We move forward in such an ever-changing environment by anticipating a change, and being familiar with different trading styles and tactics.
It is better to pass up the entire trading session that too buy or sell on a guess. – George Taylor
Although speaking directly to trading, this quote still implies a timeless trading principle or two. Largely, this speaks to trading’s appropriate role as a business or even as a hobby, and not as entertainment or a pastime. Minimally, this speaks to the underlying principle of forming a set of trading rules and then staying true to them. Taylor also says, “a trader must not be so rigid as to stick to a stubborn theory,” which often motivates the trade that is made on a guess, while waiting impatiently for the actionable rules to be fulfilled.
As I think back over the years, I have been guided by four principles for decision making. First, the only certainty is that there is no certainty. Second, every decision, as a consequence, is a matter of weighing probabilities. Third, despite uncertainty we must decide and we must act. And lastly, we need to judge decisions not only on the results, but on how they were made. – Robert Rubin, former Secretary of the Treasury
I’d like to think this quote is elaborate enough to speak for itself. But I’ll add my observation of Rubin, whose Dollar interventions during his tenure were the most effective on price action I’d ever seen or since seen. Not just temporarily delaying an ongoing trend, but maximizing an intervention’s leverage by limiting its usage to when trending was most vulnerable.
We frequently self-sabotage because of our fears. Our fears can often hold us back from taking risks, but the biggest risks are often the risks not taken. – Unknown
Actually, in trading, the biggest risks are the risks taken… without risk control. A standing stop, even if further away than the mental stop you’ll probably trigger, is a required partner to any position. Patience in one’s trade selection isn’t easy. It’s easy to lose your patience when you see how well you might have done by taking one of those trades you refused. And it’s easy to lose your money when you start taking those trades, forgetting why you passed on it to begin with.
You do not trade the market. Instead, you trade your beliefs about the markets. – Van K Tharp
That includes beliefs having nothing specifically to do with the market. Self-sabotage, gambling addiction, and desperation can be worse than faulty analysis, because at least our frontal lobe is aware of the latter and can adjust it. That other junk was buried deep in your subconscious long before your first market trade. Successful traders don’t have to resolve them, but certainly at least recognize their negative influence on decisions.
Life is 10% what happens to you and 90% how you react to it. – Charles Swindoll
Trading, too. And in either case, that 90% is much more productive when approached with defined principles and practice at executing on them. A working set of scenarios, and signals that identify them, are also helpful.
Make your mind strong. Make your self-esteem high. Make yourself feel like you’re deserving of the money.– Navinder Sarao
Of course, no daily affirmation can turn a profit from a bad trade. The bigger point of this one is not to tolerate too much of a loss from a bad trade. Ed Seykota said in Market Wizards, “Everybody gets what they want out of the market,” and that includes people with poor self-esteem that let the market rule them, or with guilt complexes that use the market to punish themselves.
Facts don’t cease to exist because they are ignored. – Aldous Huxley
The mind tends to gloss over inconvenient data. Generally this is a big mistake when analyzing a chart.
Most professional (poker) players go on tilt at least once a week. – Mike Caro
There are plenty of similarities between trading and poker playing. It helps to know that even the best poker players – the ones whose faces never reveal any expression – still get flummoxed regularly.
The truth may be puzzling. It may take some work to grapple with. It may be counter-intuitive. It may contradict deeply held prejudices. It may not be consonant with what we desperately want to be true. But our preferences do not determine what’s true. – Carl Sagan
The mind can see patterns where they don’t exist. It can also see outcomes for which there isn’t any historical basis. Be vigilant in policing your own mind to avoid this trap.
Life can only be understood looking backward. It must be lived forward. – Soren Kierkegaard
Other sayings sum up pattern analysis and trading better than this one. Other sayings are more considerate about the complexities of life. But no other saying better entraps the intersection between both.
If you don’t know who you are, the stock market is an expensive place to find out. – George Goodman
Risk-taker? Perfectionist? Greedy? Each characteristic can be handy in the market, at one time or another. The difficult part is in bringing out that part of you when you can use it, and suppressing it otherwise.
If a man can see both sides of a problem, you know that none of his money is tied up in it. – Verda Ross
Never, never, never, never, never, never underestimate how much impact your existing position has on your objectivity. Never.
Poker isn’t just about calibrating the strength of your beliefs. It’s also about becoming comfortable with the fact that there’s no such thing as a sure thing—ever. You will never have all the information you want, and you will have to act all the same. Leave your certainty at the door. – Maria Konnikova
Other than to change “poker” to “trading,” this quote is self explanatory. It’s so perfect that it would make a great tattoo except for being so lengthy.
A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does damage to the pocketbook and to the soul. – Jesse Livermore
You are trying to run across a busy highway, watching intently for your opening. Suddenly you notice an opening, and second thoughts make you jump back to the curb. It is irrelevant whether you would have made it across, or gotten flattened, because at least you’re still able to take another shot.
Never let an opinion get in the way of making money. – Unknown
It’s not about the market agreeing with you. It’s about you being positioned in the market’s direction.
The fact that a great many people believe something is no guarantee of its truth. – Somerset Maugham
A majority of market participants being positioned similarly generally DOES generally validate their agreement on the facts. But the valuation of those facts is not fixed. And that valuation is true only for the moment that a trade is executed at it — even by two counter-parties that each believe the underlying facts to be true.
So here’s the thing about changing our patterns, given that the brain is predicting based on past experience, the trick is to create new past experiences to draw on. Deliberate practice is about this but to work it has to be specifically emotional. – Denise Shull
This is another case for practicing on a simulator to successfully learn new tactics.
We see things not as they are but as we are. – Herbie Cohen
One of my favorite insights I’ve gleaned from trading psychologist Denise Hull is that we subconsciously agree with analysis based on how it makes us feel. This helps to explain the cognitive dissonance that enables people to support positions and trends without supporting data (or even despite contradictory data).
Trading is most difficult mental challenge there is. No set pattern (like weather), no end of game (like sports), no clarity of meaning when things go bad. Always arguments for both directions. Ultimate ambiguity + uncertainty. Internalize that. You are the sensemaker. – Denise Shull
Unlike math, market patterns have no single solution. Expecting a single solution can lead to surprises while viewing current price action. Search for more possible outcomes, even when a specific one seems overwhelmingly likely.
Make your mind strong. Make your self-esteem high. Make yourself feel like you’re deserving of the money. – Navinder Sarao
Of course, no daily affirmation can turn a profit from a bad trade. The bigger point of this one is not to tolerate too much of a loss from a bad trade. Ed Seykota said in Market Wizards, “Everybody gets what they want out of the market,” and that includes people with poor self-esteem that let the market rule them, or with guilt complexes that use the market to punish themselves.
The first principle is that you must not fool yourself, and you are the easiest person to fool. – Richard Feynman
When considering a trade, whatever the checklist you use, include asking yourself whether this setup looks like it CAN be productive, or that it MIGHT be. This isn’t necessarily going to prevent taking a losing trade, but it’s only a problem if price went horribly astray.
Win or lose, everybody gets what they want from the market. Some people seem to like to lose, so they win by losing money. – Ed Seykota
Simple solution: Want to MAKE money, right? Well, people that like to lose money don’t often know it, and they don’t know why or how to resolve those issues. Wanting to make money, or disliking losing money, are good first steps. Trying to be cognizant of other motivations is the much more rewarding — and difficult — mental game.
The greatest mistake you can make in life is to be continually fearing you will make one. – Elbert Hubbard
More profitable is to spend time on understanding what led to a mistake, correcting it, and exploring whether the mistake indicated anything separately relevant. Also, sessions are limited, so it’s just a matter of doing business that the threshold for acceptable entries can’t be so “safe” as to be unrealistic.
My sole advantage in life is that I know some of my weaknesses. – Nassim Nicholas Taleb
Traders know the future is never guaranteed. Well, I can guarantee that live-trading without acknowledging your weaknesses will lead to ruin. Acknowledging a weakness is still a risk, but an acceptable risk because that’s a first step to improvement. The next step is to practice that trade virtually (work with me to design a routine). Even “Dirty Harry” Callahan knew: A man’s got to know his limitations
Opportunities always look bigger going than coming. – Anonymous
Patience in one’s trade selection isn’t easy. It’s easy to lose your patience when you see how well you might have done by taking one of those trades you refused. And it’s easy to lose your money when you start taking those trades, forgetting why you passed on it to begin with.
Let everything happen to you: beauty and terror.
Just keep going. No feeling is final. – Rainer Rilke
A beautiful poem in its entirety, this motivational passage is an apt but otherwise meaningless description of the perpetual market action.
Whenever you find yourself on the side of the majority, it is time to pause and reflect. – Mark Twain
Ever the contrarian, Twain also advised putting all of your eggs into one basket and then watching that basket very carefully. His “side of the majority” quote is just as valid for the market, to wonder if the trend you’re a part of is so well entrenched that too few remain to adopt and promote it meaningfully further.
A ship in harbor is safe, but that’s not why the ship is built. – Alaska Gov. Sarah Palin
Trading is not a spectator sport. We’re rarely in the crowd, and if not on the field, then only on the bench waiting to go in.
Hours of boredom followed by moments of sheer terror. – Tom McEvoy
This description of poker playing can be all too apt for trading, as well. The trader must be vigilant to remain prepared when the favored conditions come along. Perhaps more difficult is the vigilance required to avoid “forcing” a trade out of boredom or frustration. Some sessions can be like shooting fish in a barrel and the goal is to get all you can. More often the goal is not to give back capital or gains.
It’s tough to make predictions, especially about the future. – Yogi Berra
I know people that have a hard time predicting the past. As tough as it may be to predict a particular situation’s outcome, try predicting two or three for the same situation. Then be aware of each as the facts are revealed. Always remember, as Yogi also said, “In theory there is no difference between theory and practice. In practice there is.”
Vision without execution… is just hallucination. – Steve Adams
Although a famous entrepreneurial quote, it has a common thread to hesitating to act on a trading setup: That is, what interrupts them. It’s not fear of the unknown, but fear of the known — knowing that taking action will then lead to a series of more decisions, more executions. We traders have it better than entrepreneurs, because every decision is a chance to learn and improve. And we make so many more decisions with near immediate feedback throughout the week, giving us so much opportunity to improve.
The trouble with doing things right the first time is that nobody appreciates how difficult it was. – Anonymous
It’s easy to take for granted when the market seems to do what is expected of it, as if we willed it to happen. Be mindful of those times, because it spawns complacency.
Success is the ability to go from failure to failure without losing your enthusiasm. – Winston Churchill
Perhaps one of the two greatest differences between all-star traders, and all the rest.
The majority of today’s top players have been broke at least twice in the last 15 years. (What usually breaks them is (a) not keeping a big enough bankroll, (b) betting sports, (c) going on tilt, or (d) being cheated. But the top players usually spring back. They tend to play better when they need to win – usually meaning right after going broke and while rebuilding their bankrolls.) – Mike Caro
A great point about success in poker playing, which translates well to success in trading.
Don’t look back, something might be gaining on you. – Satchel Paige, Kansas City Monarchs
Don’t rest on your laurels and think you’ve built enough profit today to take trades you wouldn’t otherwise. Don’t count your money while you’re sitting at the table (someone should write a song).
You need to put yourself in the path of something happening. Nothing’s going to happen if you wait for it. Nothing changes unless something changes. – Jamie Lee Curtis
This quote might seem like it endorses always having a position, which is a sure path to ruin. But its instructional value is to view actively monitoring the market as putting yourself in its path. Immerse yourself in price action instead of waiting for it to flash neon lights and a mythical clear signal.
Practice creates technical skill but also it creates the feeling of confidence that you can “do the thing”. When traders or athletes have a failure moment, it doesn’t negate the skill. It negates the confidence … slumps happen. – Denise Shull
This is an argument for spending sufficient time practicing intraday on a virtual trading simulator. Whether practicing entry scaling or taking stops, building the muscle memory also justifies relying on the ability.