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Market Quotes

Market Quotes

Foreward

The share market essentially reflects the attitude and expectations of market participants in response to the emerging financial and economic environment. People tend to be universally greedy when they think the share price will rise and conversely, their mood can easily turn to fear and panic if they are sufficiently persuaded that share prices will fall. Human nature is the same in all markets the world over. By market participants, we refer to traders and investors. Traders focus their attention on intra-day and intra-week market activity. Their time horizon is rarely longer than a couple of weeks. They tend to trade in the derivative markets such as the warrants, CFD's, SSF's and the futures and options markets. As a result, they must be highly disciplined and quick to recognise a mistake, or they will soon be wiped out financially. The vast majority of traders use technical analysis as a basis for making their decisions. While traders are solely interested in capital gains, the investor also considers current and future income streams in the form of dividends when making a decision. The time horizon of investors is much longer, usually spanning at least two years, often much longer. As a rule, investors are more conservative, taking fewer risks than traders and use more fundamental analysis as a basis for making their decisions. Even though the risks that each type of market participant is willing to take, as well as the relevant time horizons, are different, the principles of market psychology are essentially the same. This lesson covers various short market quotes and insights into these principles.

Advice

"Advice is what we ask for when we already know the answer but wish we didn't." - Erica Jong

Asset allocation

"We are focused on four sectors that have exhibited unvarying demand regardless of economic activity and that have key fundamental strengths that help explain why they've been around for hundreds of years. The inherent demand of people to smoke, drink and gamble … is clearly h2 and long-lasting." - Charles Norton

"The industrial economies of the past, where you just needed a few highly educated people while the vast majority of people were working on production lines or delivering stuff, are being turned on their heads. Now nearly the entire population needs training and that's only going to make the demand for educational services that much better." - Guy Spier

"There is something inevitable to me about "positional" (luxury) goods. The more you prosper, the more narrow the universe of items through which you can express your prosperity." - Thomas Russo

"We've had considerable success in buying technology companies that have great balance sheets. Companies like this have the flexibility to invest in new initiatives, buy new technology and invest in research and development. Even if they aren't profitable today, you have the potential for a gold mine if the business turns around." - John Buckingham

"Real estate is a natural for value investing … real estate companies typically have identifiable hard assets that are relatively easy to value based on a sum-of-the-parts analysis to arrive at a net asset value you can compare with the current stock price. (But) we've never been that fond of the hotel business because the tenants move out every night. That makes the business susceptible to economic swings in a way that office buildings with long- term leases to credit-worthy tenants aren't." - Michael Winer

"Gold kind of scares me because very often the people involved with it seem to be slightly insane. My other problem is that I don't know how to value it." - James Montier

"We're willing to own gold even though it may not act as a hedge in the near future, because we have a fairly clear vision about what will happen to inflation three, four or five years out, and it's not a pretty sight." - Charles de Vaulx

"I have always had an affinity for companies that make things. We favour companies with transparent businesses that we can understand fairly quickly and those that have large, recurring maintenance, repair and overhaul revenues." - Alexander Roepers

"We don't like businesses that are completely reliant on human capital that can walk out the door. We have no rule against it, but you generally won't find us investing in things like investment banks or consulting firms." - Donnell Noone

"The lack of investment in developing energy resources was so profound for so long that we expect to see inelastic, higher prices for a very long time, regardless of the fall in oil prices of late." - John Burbank

Avoiding burnout

"If you are working and performing hard, then you should take great care not to burnout. You can avoid mental burnout by ensuring that your daily routine remains fun: there is a limit to your mental energy that you should respect. As you get better at something, people will want more and more of your time, and will rely on you more and more. It is easy for commitments to get bigger and bigger: people tend to be quite happy to consume other people's mental resources without worrying about the consequences." - Source Unknown

Attitude

"There's nothing remarkable about it. All one has to do is hit the right keys at the right time and the instrument plays itself." - Johann Sebastian Bach

"To different minds, the same world is a hell, and a heaven." - Ralph Waldo Emerson

"Adopting the right attitude can convert a negative stress into a positive one." - Hans Selye

"Each of us makes his own weather, determines the colour of the skies in the emotional universe which he inhabits." - Bishop Fulton J. Sheen

Awareness

"What is necessary to change a person is to change his awareness of himself." - Abraham Maslow

Beating the market

"The task of beating the market is not difficult. It is the job of beating ourselves that proves overwhelming."- Martin Pring

"It is the difference of opinion that makes horse races."- Mark Twain

"What's really quite remarkable in the investment world is people are playing a game which, in some sense, cannot be played. There are so many people out there in the market; the idea that any single individual without extra information or extra market power can beat the market is extraordinarily unlikely. Yet the market is full of people who think they can and full of other people who believe them. This is one of the great mysteries of finance: why do people believe they can do the impossible? Why do other people believe them?" - Daniel Kahneman

"If you knew what was going to happen in the economy, you still wouldn't necessarily know what was going to happen in the stock market."- Warren Buffett

"Despite the solemn import that fund companies attribute to past performance, there's no evidence that the 4% who beat the index owe their record to anything other than random statistical variation. The whole industry is built up around a certain degree of black magic."- Fortune Magazine

"It's not that stock prices are capricious. It's that the news is capricious."- Burton Malkiel

"After taking risk into account, do more managers than you'd see by chance outperform with persistence? Virtually every economist who studied this question answers with a resounding no. Mike Jensen in the Sixties and Mark Carhart in the Nineties both conducted exhaustive studies of professional investors. They each concluded that in general a manager's fee, and not his skill, plays the biggest role in performance." - Eugene Fama

"This decade is strewn with examples of bright people who thought they built a better mousetrap that could consistently extract abnormal returns from the financial markets. Some succeed for a time. But while there may occasionally be misconfigurations among market prices that allow abnormal returns, they do not persist."- Alan Greenspan

"I'm often accused of "disempowering" people … I refuse to give credence to anyone's hope of beating the market." - Jasen Zweig

"Why does indexing outmanoeuvre the best minds on Wall Street? Paradoxically, it is because the best and brightest in the financial community have made the stock market very efficient. When information arises about individual stocks or the market as a whole, it gets reflected in stock prices without delay, making one stock as reasonably priced as another. Active managers who frequently shift from security to security actually detract from performance by incurring transaction costs." - Burton Malkiel

"Economists, when faced with a conflict between theory and evidence, discard the theory. Stockbrokers discard the evidence."- Andrew Smithers

"It's a big lie that, repeated often enough, is eventually accepted as the truth. You can beat the market, trounce the averages, outpace the index, beat the street. An entire industry stokes this fantasy." Jonathan Clements

Brains

"I not only use all the brains I have, but all that I can borrow." - Holbrook Jackson

Certainty

"Even if you're on the right track--you'll get run over if you just sit there." - Arthur Godfrey

"To be absolutely certain about something, one must know everything or nothing about it."- Olin Miller

Changing markets

"The markets are the same now as they were five or ten years ago because they keep changing - just like they did then." - Ed Seykota

"It is not necessary to change. Survival is not mandatory." - W. Edwards Deming

Commitment

"Traders, like athletes and artists, need to create a certain state of mind in which to successfully practice their craft. The best traders recognise the psychological paradoxes inherent in trading. The trading environment is quite different from the environment of our everyday lives. In life, our fears help teach us to avoid painful experiences. But in trading, the fear of losing money or making a mistake can actually create the very circumstances one tries to avoid. To the trading mind, the pursuit of trading opportunities is a continuous challenge. One can be comfortable with the risk of loss if the trade was based on a good idea but nevertheless turned out badly due to unforeseen circumstances or a sudden move in the market. From this perspective, missing a good opportunity is mentally and financially equal to being on the wrong side of a trade." - The Mind of the Markets, by F. J. Chu

"The character of a person is in direct proportion to his commitment to excellence." - Vince Lombardi

"The vast majority of people want more money in order to gain power, freedom, or control. But what does that signify? Does it point to the need for self-sufficiency? The frustration of relationships with others? The desire for a guarantee from failure and tragedy? Merely wanting to accumulate more money is not unhealthy per se, but possessing money as one's central motivation in life certainly is. Money is an inadequate panacea for all these possible and impossible dreams because it is only worth what it can actually buy. Without a balanced view, too many people spend too much time in the lonely pursuit of counting their money." - F. J. Chu, The Mind of the Markets

"Do not look for magic systems. Do not look for the lazy man's way to riches...Read, study, listen, and think. Compare and compare. Make lists of pros ands cons. Make up scenarios. Make up opposite scenarios. Compare. When you get confused, back away. Start again. Watch. Listen. Compare. Never force a conclusion. Observe, compare, and wait." - Donald Worden, Trader's Manifesto

"When we have conviction - when all the pieces seem to fit - then we have to go for it. We have to commit ourselves, for this act of commitment is as much an essential ingredient of success in trading as risk-control. What we say when we commit ourselves is: 'this position can lose, like any position. We must have a contingency plan for getting out economically. But it's an exceptionally good position and it's not going to lose.' And when all the pieces fit, we should bet our final stake straight off, in my view. That way we bet most when the odds are best, i.e. when the risk is lowest." - John Percival, The Way of the Dollar

"We do better in the long run by viewing the stock market as a 'home base', rather than as a trip to the casino. If we trade stocks every time they move a point or two, continually fall short, deal only in options, or trade in futures, our dreams of a big win may mask our increased risk of eventual - or even frequent - loss." - Gary Moore, Spiritual Investments

"It never entered my mind to sit back and say, 'I can't do it.' I had such a tremendous appetite to excel and to grasp all that there was to know to be the best there is. This attitude is such a motivational force in my life no matter what I do. My learning involved great sacrifice. I spent lots of evenings home alone. For me to go hang out at the pub with the gang just didn't cut it. I would rather be at home with my charts, which brought me great satisfaction. It is something that I still love to do." - Dan Zanger

"Statistics and society may predict, but you alone determine whether you will succeed or fail. You alone are in control; take responsibility for your performance and your life. There are always tremendous opportunities in the markets. It is not what happens; it is what you do with what happens that makes the difference between profit and loss." - Edwin Lefevre, Reminiscences of a Stock Operator

"The first thing is to love your sport. Never do it to please someone else. It has to be yours." - Peggy Fleming

"All great traders initially experience great difficulty and frustration, but what sets them apart is that they never allowed themselves to experience failure. That is to say, they refused to represent their trading experience, no matter how negative, as personal failure ...We would like to share someone's life history with you:

  • At the age of 21 he failed in business.
  • At the age of 22 he lost a state legislative race.
  • At the age of 24 he failed in business again.
  • At the age of 26 his lover died.
  • At the age of 27 he had a nervous breakdown.
  • At the age of 34 he lost a congressional race.
  • At the age of 36 he lost another congressional race.
  • At the age of 45 he lost a senatorial race.
  • At the age of 49 he again lost a senatorial race.
  • But at the age of 52 he was elected President of the United States.
  • This was Abraham Lincoln.

Robert Koppel and Howard Abell, The Inner Game of Trading"I trade for the thrill of victory. This is the greatest job in the world. Where else can you be alone in your home, watching your monitors, not having to fight traffic, and not having a boss! I'm constantly intrigued all day long and never bored. I can't wait for the day to start and I'm very sad to see the day end. I just love this work so much!" - Dan Zanger

"In the early stages of your trading career, don't worry too much about whether you should buy or sell, but rather about how you've executed whatever trade you've made. You'll learn more from your trades that way." - J. Peter Steidlmayer, Steidlmayer on Markets

"Just like small fires create small amounts of heat, weak desires generate weak results. But when a powerful desire statement transforms that small fire into a raging inferno, it can put you on the fast track toward accomplishing your goals. It will produce an 'I want to' attitude that is so intense that it dramatically increases the likelihood of dreams becoming real." - Kenneth Baum, The Mental Edge

"...to tell someone 'Don't buy a stock on a hot tip' - advice with which no expert would disagree - just isn't enough, because it ignores the question of why people feel inclined to act on those tips in the first place. Does Alcoholics Anonymous reach out to its members by merely saying 'Stop drinking,' as if those words alone will do the trick? Of course not, and the same principles apply to the investment world: You can't break your bad habits without knowing a little more about them." - Derrick Niederman, The Inner Game of Investing

"I think when you grow up and have a lot of life experience with adversity and learn ways to overcome them you are confident that no matter how bad the situation is you tell yourself, "I can survive." I can think of countless times in trading where things were adverse, but if I didn't have the right attitude, I would have crumbled and walked away and never have been able to come back." - Robert Koppel and Howard Abell, The Inner Game of Trading

"No matter what you do, such as becoming a doctor, you have to put in many, many years of little income and long, hard hours to succeed. While learning, I used to put in anywhere from thirty to sixty hours a week for six years solid before becoming a consistent money winner. I'd constantly go back and learn from my mistakes: chart pattern mistakes, trend line mistakes, timing mistakes, all kinds of mistakes. This whole package has to be put together to come up with the right stocks at the right time that make the big, big moves." - Dan Zanger

"I'll be here until I die. Even if I had fifty million dollars, what else am I going to do? This is what I love to do. I think those people who come in and say that they want to make a million dollars, or ten million dollars, and then plan to quit are the people who never make that much money because they have the wrong focus. They have a focus on being done with it, so they'll become more aggressive than they need to be. They'll take stupid trades because they feel really rushed and don't want to be here. Whereas, my goal is that I always want to be here." - Brandon Fredrickson

"The less you know, the more you believe." – Bono, U2

"Tape reading was an important part of the game; so was beginning at the right time; so was sticking to your position. But my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities. In short, I had learned that I had to work for my money. I was no longer betting blindly or concerned with mastering the technique of the game, but with earning my successes by hard study and clear thinking. I also had found out that nobody was immune from the danger of making sucker plays." - Edwin Lefevre, Reminiscences of a Stock Operator

Competition mental skills

"Performance outcomes are more likely to be achieved when what is done prior to and during a competition has been planned, practised, and shown to be successful. In contests, an athlete should never use new approaches, techniques, or strategies without them first being tested, refined, and trained. An athlete should compete with only what is known and has been practised."- Source Unknown

Confidence

"Know and believe in yourself, and what others think won't disturb you."- William Feather

"Position yourself so that you can't be knocked out of a market by a few setbacks. Continuous involvement prepares you to take advantage of any good opportunity that arises. It also contributes to your self-confidence. It creates a safe environment in which you can experiment and learn, knowing that no experience will be a career-ending one." J. Peter Steidlmayer, Steidlmayer on Markets

"Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness, that most frightens us. We ask ourselves, "Who am I to be brilliant, gorgeous, talented, and fabulous?' Actually, who are you not to be? You are a child of God. Your playing small doesn't serve the world. There is nothing enlightened about shrinking so that other people won't feel insecure. We were born to make manifest the glory of God that is within us. It's not just in some of us; it's in everyone. And when we let our own light shine, we unconsciously give other people permission to do the same. As we are liberated from our own fear, our presence automatically liberates others." - Nelson Mandela, 1994 Inaugural Speech, a quote from Marianne Williamson

"... You have to find individuals who have a curious blend of ego. You clearly need to have people who have very high self-confidence, who have a very high ego. In some cases, you'll find individuals who manifest that as a kind of arrogance which can rub people the wrong way at times. Sometimes that arrogance can be very important because, after all, you are going to be a loser more often than you're right . . . And if you have to have that arrogance or courage, then that's alright. However, it is not courageous to say, 'I am going to make this one big bet even though everyone else says I am wrong.' That is the home-run scenario and that is not what we are talking about. We are talking about the courage and self-confidence and ego not just to go against the crowd but to be wrong, a lot."- Alpesh B. Patel, The Mind of a Trader

"Both individual and professional investors can be overconfident about their abilities, knowledge, and future prospects. Overconfidence leads to excessive trading that can lower portfolio returns. Overconfidence also leads to greater risk taking. You may be accepting more risk due to under diversification and a focus on investing in small companies with higher betas. Finally, investors' ever increasing use of online brokerage accounts is making them more overconfident than ever before." - John R. Nofsinger, Investment Madness

"What investor doesn't believe that there are great, successful traders/investors out there? They have the secret, the power, the information, allowing them to secure what is rightly ours. It's not the money we envy as much as the investment wizard's mysterious skill at making it. It's that fantasised skill that the envious investor feels the desire to possess.

"...You feel deficient. Envy does that to you. Unconsciously, you're thinking: 'What have I done that makes me a loser in this way? Am I being punished for something I did wrong? Was I being greedy?'

"So you assume you need help. You need a good broker, a magical trader, a better system. Something to make up for what you're missing.

"It all boils down to bad investment judgement. Envious investors become timid. They hang back and wait for direction. They hesitate before buying or selling, and as any investor knows, 'He who hesitates is lost.' In response to the losses caused by hesitation, envious investors occasionally switch gears, becoming victims of impulsive, poorly planned gambles." - The Psychology of Smart Investing, by Ira Epstein & David Garfield, MD

"...it seems clear that people are capable of thinking, at least at some intuitive level, 'If I buy a stock, then it will go up afterwards' or 'If I buy a stock, then others will probably want to buy the stock, too, because they are like me.' Or 'I have a hot hand lately; my luck is with me.' Such thinking is likely, in a subtle way, to contribute to the overconfidence that may help the propagation of speculative bubbles." - Irrational Exuberance, by Robert J. Shiller

"How do you beat the averages? By taking the risk of your own perceptions. By betting that you are smart enough, clever enough, experienced enough, to perceive which few groups will do better than the rest. Rather than trying to cushion your portfolio with the market equivalent of working for a pension instead of a partnership, you try to load up on what looks like a winner or two or three." - Justin Mamis, The Nature of Risk

"Most people hate to be wrong. No one I ever knew relished saying, 'You know, I'm dead wrong in this.' Ego is the killer here; ego in the psychological sense, rather than in the philosophical meaning, is the opposite of self-esteem. Ego (or false pride) says (subconsciously) 'I can never be wrong, or make a mistake, because I am great. If I do make an error in judgement, I will not be respected.' But human beings are not gods, and traders are not omniscient; they must be wrong sometimes. To be unwilling to accept this would be illogical. To be a day trader you need self-esteem, the healthy sense that you are competent and worthy. If you don't feel confident with your own judgement, you can't execute your trades properly. In order to trade, you must be able to take losses, thousands of them, and yet come back and trade again with confidence. Just remember: Don't let ego (false pride) take the place of self-esteem." - Victor Sperandeo, Principles of Professional Speculation

"Your past experiences can lead to specific behaviours that harm your wealth. For example, you are prone to attribute past investment success to your skill at investing. This leads to the psychological bias of overconfidence. Overconfidence causes you to trade too much and to take too much risk. As a consequence, you pay too much in commissions, pay too much in taxes, and are susceptible to big losses." - John R. Nofsinger, Investment Madness

"In your market analysis, do not get so cerebral that you are ineffective. It doesn't matter if the computer says so, reality is the last sale. Traders and investors have a tendency to overanalyse. One of the stages every trader (and many investors) goes through is over reliance on mechanical and computerised trading systems. These are very useful tools, but they are not answers. Many times I have seen the technical indicators say, 'sell,' yet the market just refuses to co-operate. It keeps trading up. The only truth is the last sale. Fight the tape and you will collapse." - Dean Lundell, Sun Tzu's Art of War for Traders and Investors

"In all other fields of activity we need to convince people around us that our opinion is correct. In the stock market, it just doesn't work this way. It's suicide to try to trade with this approach. Instead of insisting that you are right, you have to lose your ego and any opinion you have of the market. Just be in tune with what's happening in the moment.

"If a stock goes against you, then you have two choices. The first choice is that you are right and the market and its sellers are wrong. You think you know better, so you will hold the stock and try to get your way eventually. The second choice is that the market is never wrong. If the market goes against my position, then I am wrong and I have to get out. The first choice is the road to the grave in the stock market. The second choice is the choice of winners. It's not easy to regulate your mind-set to think in this way." - Vadym Graifer

How do you keep your confidence? If you trade a lot, you see markets come back and you see that you're right. You develop confidence from that. What amazes me is how many times I watch my trading account go down and then come right back. In spite of myself, I'll be making money. In spite of myself. That's the thing that draws confidence to me: you can lose it, but you can sure make it back real fast, too. That's a nice thing. Once you realize you are able to do that, it's a real confidence-builder. That's when you don't feel it as that much of a loss, when you are down whatever amount of money, because you think, "That is an illusionary number. That number doesn't exist. Even though there is less in your account than you had yesterday, it will be more some day in the future." - Source Unknown

"Confidence, in short, means knowing you're going to win. It isn't a magic quality which once possessed can never be lost. To be sure, regular winners will have an inner conviction that they must win over time, if they play to the rules. This is partly an inherent state of mind and partly the result of long experience of seeing the rules working. But no one but a fool is convinced they can win just by playing. You win by doing your homework better, following the rules more closely, and acting more consistently then the other players. Winning gives you confidence and confidence helps you win . . . The closer you get to only trading when you're confident you'll win, the higher your win rate and your confidence will be." - John Percival, The Way of the Dollar

"...maybe a better question about confidence - financial and otherwise - is not why people are overconfident to begin with, but why they stay overconfident. You see, the problem with overconfidence is not the innate bias toward optimism that most people seem to possess. That's a good thing, it keeps the world moving forward. The problem is the inability to temper optimism as a result of prior experience. Frankly, we don't learn well enough from our mistakes. Consider: If overconfidence is as big a problem as we say it is, it should be a short-term problem at worst. The learning process would ideally go something like this: We think highly of ourselves, the world and events show us who is the boss, and we become less confident and more realistic about our knowledge and skills. Yet in the main, this does not happen." - Belsky & Gilovich, Why Smart People Make Big Money Mistakes

"I have had a lot of conversations with one very, very successful trader in one of the chat rooms. One of the things that he told me was that trading was very boring for him. When I had this conversation with him about a year ago, I couldn't picture being bored. But over the last three or four months I've actually gotten to the point where trading has become very boring. (laughing) You know, it's almost like production factory work. You show up at your station, things come by, you put them together, you collect your check, and you go home. What's kept my interest is the interaction with the other traders. I regularly communicate with about ten other traders and we spend most of the time during the day discussing various market issues. Also, what help I can be to other people keeps me interested, as well. But the trading itself has gotten very routine because I know the system and it has worked very well. If it were not for the interactions and the chat rooms, it would be a very lonely profession. I can't imagine anybody doing this without being involved in one of the various rooms, because you're essentially sitting at home alone all day. I like to keep active. I do consulting one day a week for a computer company. And last month I bought a small company. As you can see, I get bored quickly." - Albert Mazzone

"The only thing I can recommend to aspiring traders is simply this: Understand that there is no magic pill, other than hard work and perseverance. As much of a cliché as it may sound, it's simply the truth. One of the most important things in trading the markets is finding that critical balance between a good level of confidence in your trading and a real sense of perpetual humility." - Marderand Dupee, The Best: Conversations with Top Traders

"People have the tendency to believe that the accuracy of their forecasts increases with more information. This is the illusion of knowledge - that more information increases your knowledge about something and improves your decisions. However, this is not always the case - increased levels of information do not necessarily lead to greater knowledge. There are three reasons for this. First, some information does not help us make predictions and can even mislead us. Second, many people may not have the training, experience, or skills to interpret the information. And, finally, people tend to interpret new information as confirmation of their prior beliefs." - Investment Madness, by John R. Nofsinger

"...maybe a better question about confidence - financial and otherwise - is not why people are overconfident to begin with, but why they stay overconfident. You see, the problem with overconfidence is not the innate bias toward optimism that most people seem to possess. That's a good thing, it keeps the world moving forward. The problem is the inability to temper optimism as a result of prior experience. Frankly, we don't learn well enough from our mistakes. Consider: If overconfidence is as big a problem as we say it is, it should be a short-term problem at worst. The learning process would ideally go something like this: We think highly of ourselves, the world and events show us who is the boss, and we become less confident and more realistic about our knowledge and skills. Yet in the main, this does not happen." - Why Smart People Make Big Money Mistakes, by Belsky & Gilovich

"What investor doesn't believe that there are great, successful traders/investors out there? They have the secret, the power, the information, allowing them to secure what is rightly ours. It's not the money we envy as much as the investment wizard's mysterious skill at making it. It's that fantasized skill that the envious investor feels the desire to possess.

"...You feel deficient. Envy does that to you. Unconsciously, you're thinking: 'What have I done that makes me a loser in this way? Am I being punished for something I did wrong? Was I being greedy?'

"So you assume you need help. You need a good broker, a magical trader, a better system. Something to make up for what you're missing.

"It all boils down to bad investment judgment. Envious investors become timid. They hang back and wait for direction. They hesitate before buying or selling, and as any investor knows, 'He who hesitates is lost.' In response to the losses caused by hesitation, envious investors occasionally switch gears, becoming victims of impulsive, poorly planned gambles." - The Psychology of Smart Investing, by Ira Epstein & David Garfield, MD

"On Wall Street, wise men, as well as fools, can be easily drawn into booby traps. In fact, in my experience a person's years and quality of education have very little to do with making big money investing in the market.

"The more intelligent people are, the more they tend to think they know what they are doing - and the more they will have to learn the hard way how little they really know about outsmarting the stock market. The few people I have known over the years who have been unquestionably successful making money in stocks were decisive, decision-making individuals without huge egos.

"The market has a simple way of whittling all excessive pride and overblown egos down to size. After all, the whole idea is to be completely objective and recognize what the marketplace is telling you, rather than try to prove that the thing you said or did yesterday or six weeks ago was right. The fastest way to take a bath in the stock market or go broke is to try to prove that you are right and the market is wrong." - How To Make Money in Stocks, by William J. O'Neil

Credit

"Modern man drives a mortgaged car over a bond-financed highway on credit-card gas." - Earl Wilson

Crowd behaviour

"There are those who lack faith in the wisdom of crowds. But the market does not follow logic; it follows some mysterious tides of mass psychology. Thus earnings projections get marked up and down as the prices go up and down, just because Wall Streeters hate the insecurity of anarchy. If the stock is going down, the earnings must be falling apart. If it is going up, the earnings must be better than we thought. Somebody must know something we don't." - Adam Smith, The Money Game

"You never feel good about buying a great bargain. When you buy a great bargain, you're doing it with sweaty palms, you're leaning against the crowd, engaging in contrary thinking, and you're pretty much alone." - Arnold Van Den Berg, Outstanding Investors Digest

"Fight the crowd. It is warm and fuzzy in the middle of crowds. You do not need to be warm and fuzzy with investing." - Seth Klarma, Margin of Safety

"My job was being paid by wealthy families to help them choose stocks and bonds. My results were much better when I was working from here than from Manhattan, Radio City and Rockefeller Centre. I had good results in New York. When I came here, I had better results. The secret … is that to buy stocks at a bargain price you have to do the opposite of the crowd. When you're going to the same meetings with the other people in Manhattan, it's hard to be different." – Sir John Templeton

"The crowd tends to follow the wrong signs near the market tops and bottoms. At the greatest depths of a bear market, the economy is generally in recession and business profits are tumbling. Investors are punch drunk from suffering huge losses for a year or two of falling prices. Bad news dominates the headlines. Most people only see the downtrend continuing. This is the gloom and doom that bear markets bottom and bull markets begin. Watch for loosening credit and interest rate decreases." - Marty Zweig

"There are far more "investment professionals" and way more IQ in the field, as it didn't use to look that promising. Investment data are available more conveniently and faster today. But the behaviour of investors will not be more intelligent than in the past, despite all this. How people react will not change; their psychological makeup stays constant. You need to divorce your mind from the crowd. The herd mentality causes all these IQs to become paralysed. I don't think investors are now acting more intelligently, despite the intelligence. Smart doesn't always equal rational. To be a successful investor you must divorce yourself from the fears and greed of the people around you, although it is almost impossible." - Warren Buffett

"Nor will I buy market-favoured stocks. I particularly notice it when I attend meetings for technology stocks and see all the people crowding into the room and so on. If there's standing room only, that's usually a pretty fair sign it's not a good time to buy the stock." - Phillip Fisher

Cutting losses

I don't have a problem letting my profits run, which many traders do. You have to be able to let your profits run. I don't think you can consistently be a winner trading if you're banking on being right more than 50% of the time. You have to figure out how to make money by being right only 20%-30% of the time." - Bill Lipschutz

"Buying on retracement is psychologically seductive because you feel you're getting a bargain versus the price you saw a while ago. However, I feel that approach contains more than a drop of poison. Watch idly while profit- taking opportunities arise, but in adversity run like a jackrabbit." - William Eckhardt

"The best advice I can give to the ordinary guy trying to become a better trader is learn to take losses. The most important thing in making money is not letting your losses get out of hand." - Marty Schwartz

"I spend my day trying to make myself as happy and relaxed as I can be. If I have positions going against me, I get right out; if they are going for me, I keep them." - Paul Tudor Jones

"Your worst-case exit, which is designed to preserve your capital, should be determined ahead of time. In addition, you should also have some idea about how you plan to take profits and a strategy for letting your profits run." - Van Tharp

"The best advice I can give to the ordinary guy trying to become a better trader is, 'Learn to take losses.' The most important thing in making money is not letting your losses get out of hand." - Tom Baldwin

"My percentage of winners is only about 50/50, because I cut my losers very quickly. The maximum loss I allow is 7%, and usually I am out of a losing stock a lot quicker. I make my money on the few stocks a year that double and triple in price. The profits in those trades easily makes up for all the small losers." - David Ryan

"My philosophy is that all stocks are bad. There are no good stocks unless they go up in price. If they go down instead, you have to cut your losses fast." - William O'Neil

"The trading rules I live by are: 1 Cut losses. 2 Ride winners. 3 Keep bets small. 4 Follow the rules without question. 5 Know when to break the rules." - Ed Seykota

"The most important thing is to have a method for staying with your winners and getting rid of your losers. If a trade doesn't look right, I get out and take a small loss." - Gary Bielfeldt

"He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a bigger profit." - Edwin Lefevre and Jesse Livermore

"I am no better than the next trader, just quicker at realising my losses and moving on to the next trade." - George Soros

"Yea right, it's just got to bottom out so let's average down. Who was it that was worth about a billion dollars that said he wasn't wealthy enough to average down?" - Joe DiNapoli

Danger - nature at work

The very same geophysical features that make the Earth so life-giving and preserving also make it dangerous. For example, the spectacular volcanoes that in the early history of our planet helped to generate the atmosphere and the oceans have in the last three centuries wiped out a quarter of a million people and injured countless others. At the same time, the rains that feed our rivers and provide us with the potable water that we need to survive have devastated huge tracts of the planet with floods that in recent years have been truly biblical in scale. - Source Unknown

Dealing with losses

"Ideal day traders are deeply introspective, and know who they are as deeply as possible. To be a successful day trader means to be real and honest with yourself at all times. Without the ability to be honest with yourself, forget this Chapter you cannot day trade. You must be at a stage where you do not try to lie to yourself. The simple fact is, you will lose sometimes. You don't have to rationalise it away; you don't have to hide behind typical defence mechanisms. Just stand up and say 'I'm wrong.' This admission does not mean that you are stupid or incompetent. Being wrong is part of this business, and a part of life. In day trading, you are your only enemy; you are your own boss, and you determine your own destiny." - Victor Sperandeo, Principles of Professional Speculation

"After taking a stock loss, investors feel h2er regret if the loss can be tied to their own decision. However, if the investor can attribute the loss to things outside of his or her control, then the feeling of regret is weaker. For example, if the stock you hold declines in price when the stock market itself is advancing, then you have made a bad choice and regret is h2. In this case, you would avoid selling the stock because you want to avoid the h2 regret feelings. Alternatively, if the stock you hold drops in price during a general market decline, then this is divine intervention and out of your control. The feeling of regret is weak and you may be more inclined to sell." - Investment Madness, by John R. Nofsinger

"You need to be able to read your mental and physical stress cues and interpret them correctly. Notice if your arousal level is too high. You can then intervene early, before the stress becomes too unmanageable. You can learn to take deep breaths, do some positive self-statements, and relax enough to problem solve and re-adjust appropriately to the situation." - Your Performing Edge, by Joann Dahlkoetter, Ph.D.

"As one trader said, 'learn to love your small losses.' If you can learn to love your small losses, you are that much closer to a big winning trade. Keep your losses small, but if you learn to love your small losses you can say, 'Even though I had a loss it was a good trade, because it was a small loss and a well-planned and executed trade.' Sometimes, the best trades are not the winning ones that put money in your pocket; sometimes they are the ones that get you out of the market at the right time."- The Mind of a Trader, by Alpesh B. Patel

"During ongoing activities, such as day trading, you must learn how to pace yourself. This means alternating between periods of intense activity and periods of markedly decreased activity, requiring little of your attention span. These 'pauses' should occur when you do not have to respond quickly to a current market flux. This is hard advice to follow for certain types of investors - paranoid, obsessive, and others. They refuse to allow themselves a break, sometimes on the theory that if they stop, they'll give someone else an opportunity to gain on them. But you can't go all out every minute of every day. Even the greatest professional athletes pace themselves during games or races, gathering their strengths for when they'll most need it. You, too, should find a pace that suits you." - The Psychology of Smart Investing, by Ira Epstein & David Garfield, MD

"You can get ahead of yourself in this game, and it's dangerous to get cocky. But I've had times where for an hour I could do no wrong. I'm trading a stock and 99 percent of the trades are good, they're all for 3000 or 5000 shares, and I'll make 10 grand. Then I'll overextend myself and maybe buy 10,000 or 15,000 shares, fighting the trend just because I know the stock has hit a support level. Then it blows through that support and I can't get out without losing half a point or a buck. That move could undo half of what it took me an hour to make. When that happens, you've just got to sit back, take a deep breath, get a glass of water, and get back in." - Source Unknown

"Money does not give a trader more comfort, because, rich or poor, he can make mistakes and it is never comfortable to be wrong. And when a millionaire is right his money is merely one of his several servants. Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong - not taking the loss - that is what does the damage to the pocketbook and to the soul." - Reminiscences of a Stock Operator, by Edwin Lefevre

"During ongoing activities, such as day trading, you must learn how to pace yourself. This means alternating between periods of intense activity and periods of markedly decreased activity, requiring little of your attention span. These 'pauses' should occur when you do not have to respond quickly to a current market flux. This is hard advice to follow for certain types of investors - paranoid, obsessive, and others. They refuse to allow themselves a break, sometimes on the theory that if they stop, they'll give someone else an opportunity to gain on them. But you can't go all out every minute of every day. Even the greatest professional athletes pace themselves during games or races, gathering their strengths for when they'll most need it. You, too, should find a pace that suits you." - The Psychology of Smart Investing, by Ira Epstein & David Garfield, MD

"A trader may put too much energy into trying to protect a losing position, hoping that it will turn around, rather than saving energy by getting out of the trade. The unwillingness to face the truth and readjust to the new requirements of today's market is a good example of the psychological defences of denial and rationalization that lock the losing trader into repeating yesterday's errors with yesterday's strategy." - Trading to Win, by Ari Kiev, M.D.

"None of us likes to admit to himself that he has been wrong. If we have made a mistake in buying a stock but can sell the stock at a small profit, we have somehow lost any sense of having been foolish. On the other hand, if we sell at a small loss we are quite unhappy about the whole matter. This reaction, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process. More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason . . . Furthermore, this dislike of taking a loss, even a small loss, is just as illogical as it is natural. If the real object of common stock investment is the making of a gain of a great many hundreds percent over a period of years, the difference between, say, a 20 percent loss or a 5 percent profit becomes a comparatively insignificant matter."- The Investor's Anthology, by Charles D. Ellis

"As a trader starting out, the thing you need to realize is that you're going to lose. Psychologically, human beings are not set up to lose. If the market moves against me, I take the loss and I move on. I really try to not let it bother me at all. You could probably compare it to professional sports. If you're a professional basketball team, you're not going to win every game. The goal is to win the most games you can. When you lose a game, you look at it and see what you did wrong and move on. Don't dwell on it. You don't let it get to you too much or you're not going to win any more games." - Dave Alexander

"Suppose you face a choice between (1) accepting a sure loss of $7,500, or (2) taking a chance where there is a 75 percent chance you will lose $10,000 and a 25 percent chance you will lose nothing. The expected loss in both choices is $7,500. Would you choose to take the guaranteed loss or take a chance? Most people opt for the latter. Why? Because they hate to lose! And the uncertain choice holds out the hope they won't have to lose." - Beyond Greed and Fear, by Hersh Shefrin

"A trader may put too much energy into trying to protect a losing position, hoping that it will turn around, rather than saving energy by getting out of the trade. The unwillingness to face the truth and readjust to the new requirements of today's market is a good example of the psychological defences of denial and rationalization that lock the losing trader into repeating yesterday's errors with yesterday's strategy." - Trading to Win, by Ari Kiev, M.D.

Dealing with stress

"Like pain, stress should also be viewed as a warning. So if you are extremely tense and anxious, you should try to establish what is causing these horrible sensations. It might be your job, or your parents, or your marriage, or the unhappy affair you are having. Whatever it is, the chances are that your stressful feelings are telling you to make changes. If you don't try to sort out the source of your stress, then learning how to manage it will only do half of the job." - Source Unknown

Decision making

"Some people, however long their experience or h2 their intellect, are temperamentally incapable of reaching firm decisions." - James Callaghan

Deriving personal growth from trading

"In this fast paced world of economic achievement and endless pursuits, it is often overlooked that trading is just a job. As such, trading should neither threaten self-esteem nor invoke hostility. Trading should be fun, challenging and fulfilling, as well as financially rewarding! Unfortunately many traders lose sight of this simple truth and turn a potentially rewarding activity into a game of Russian Roulette, threatening destruction from self-imposed pressure and fear." - Source Unknown

Destiny

"Destiny is no matter of chance. It is a matter of choice: It is not a thing to be waited for; it is a thing to be achieved." - William Jennings Bryan

Developing a trading plan

"There are hundreds of technical analysis methods and systems (combinations of methods) out there currently. Most of these have been thought out and developed for a reason. They, at least at some point in time, for certain markets, proved to be effective methodologies. You may have heard the idea that if a method is out on the Internet or in some other easily accessible medium that it's likely that it's not as effective today as it claims to be or as historical performance demonstrates it to be. Experienced traders will tend to agree with this idea. However, that doesn't mean that these methods or systems aren't going to be helpful to you. Your study and understanding of them is going to be a very important part of how you'll develop your proprietary trading plan." - Source Unknown

Discipline

"We must all suffer one of two things: the pain of discipline or the pain of regret or disappointment."- E James Rohn

"Discipline is the bridge between goals and accomplishment." - Jim Rohn

"Making money has nothing to do with intelligence. Think of all the bright people that choose careers on Wall Street. If intelligence were the key, there would be a lot more people making money trading...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, they person who can easily admit to being wrong is the one who walks away a winner." (Victor Sperandeo) - The New Market Wizards, by Jack Schwager

"To summarize, trading with confidence is to do with having a method which you have proved yourself, and which you know will win over time if you follow it consistently. That means being able to recognize the conditions which allow you to trade, and only trading when they are all present. This is comparatively easy with hindsight: when we're actually there, we can see when all the pieces fit. But beforehand, we don't know that all the pieces are going to fit: so we trade because we're impatient and fear that this maybe the best we'll get. Well, somehow we just have to get to be patient. Let's face it, it calls for great discipline." The Way of the Dollar, by John Percival

"Too often thinking about motivation is neglected by the novice trader. Because motivation stimulates and directs behaviour, it has often been described as the incentive to travel the road to our goals. It is the 'why' whereas goals are the 'what.' Lacking motivation is not as bad as not knowing we lack motivation. In the latter case, we will already have set off unprepared down the road to ruin, because self-knowledge will not have informed us that we lack the necessities for reaching our destination." - The Mind of a Trader, by Alpesh B. Patel

"I know for a fact that my discipline in executing each and every trade according to my trading system is the secret to my success...If you want to improve your trading, what you need to do is very simple. Before you enter any trade, think that you will have to explain this trade to the world in a case study format. You have to explain the reason for entry, your risk management guidelines, and why you exited the trade. If you can truly do this, I really believe that you can enjoy the same type of success I have enjoyed in this challenge." - The Stock Trader, by Tony Oz

"Rarely do any of us grow up learning how to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way. In the trading environment, you will have to make up your own rules and then have the discipline to abide by them. The problem is, price movement is fluid, always in motion, quite unlike the highly structured events that most of us are accustomed to. In the market environment, the decisions that confront you are as endless as the price movements you intend to take advantage of. You don't just have to decide to participate, you also have to decide when to enter, how long to stay in, and under what conditions to get out. There is no beginning, middle, or end - only what you create in your own mind." - Mark Douglas, The Disciplined Trader: Developing Winning Attitudes

"You will need a sound approach – one that allows you to win at trading. It's best to try to win on the grind: Plan on taking a small profit from a small number of trades. Don't think of yourself as a take-off artist; rather, think of yourself as marketing an idea whenever you enter a trade." - Steidlmayer on Markets, by J. Peter Steidlmayer

"Depending on the manner in which it is used, the market may be a tool of either the investor or the gambler. If used in a predetermined, applied, consistent, and well-researched fashion, the market will protect the investor from inflation, help money grow at an above-average rate, and provide retirement security. It is neither the goal nor the ability of gambling to provide these. Motivation is at the heart of this issue. The investor who allows long-term objectives to become obscured can easily become a gambler." - The Investor's Quotient, by Jake Bernstein

"Once you have analysed the big picture and formed and developed your plan, it is imperative that you have the discipline to stick to it. It is a common mistake for traders to disobey their own rules. Doing so inevitably will lead to more lack of discipline and a series of losing trades." - Sun Tzu's Art of War for Traders and Investors by Dean Lundell

"Investment psychology is the most important aspect of a trader. In my career as a trader, I believe that successful investing is about eighty-five percent psychological discipline, about ten percent skill, which you gain through experience and studies, and five percent luck. And I believe that the luck will come if you get the other two variables down. In other words, if you devote the psychology that you need to have to be successful and you develop the skills through your studies and hard work to constant commitment and determination, the luck will come to you." - Source Unknown

"Traders who lose follow one of several typical patterns. Some repeatedly suffer individual large losses that wipe out earlier gains or greatly increase a small loss. Others experience brief periods during which their trading wheels fall off; they lose discipline and control and make a series of bad trades as a result.

"The wise trader makes many small trades, remains involved and constantly maintains and sharpens his feel for the market. For all of his work, he hopes to receive some profit, even if it is small in dollar terms. In addition, continual participation allows him to sense and recognize the few real opportunities when they arise. These generate the large rewards that make the effort of trading truly worthwhile." - Steidlmayer on Markets, by J. Peter Steidlmayer

"If my head is not 100 percent into it, I'm not trading at peak performance. It's better just to go home. Focus and concentration are critical. I'm successful when I'm concentrating and know exactly what's going on. When I'm not doing well, one thing that helps me out of my rut is I get smaller and take one trade at a time. I try to get the pendulum back in my direction, looking to make just one winning trade. When you get frustrated, you need to take a step back. Maybe I'll go for a walk just to clear my head. I calm down, regroup, and get back into the battle. I trade smaller positions, and I take my profits. Then I'm not losing money anymore, I'm making it." - Electronic Day Traders' Secrets, by Friedfertig and West

"If it was easy to win, there would be more champions. The techniques are simple. The eternal question is how to balance patience and prudence versus going for the home run . . .In trading, pulling the trigger on when to trade is just as important as all the preparation and attention to detail that went before. If a trade does not do well at the start, the trader must be disciplined and have what-if scenarios in place for alternate courses of action. As long as the circumstances for making the trade are still in effect, the trader can stay with the position." - The Education of a Speculator, by Victor Niederhoffer

"You will need a sound approach - one that allows you to win at trading. It's best to try to win on the grind: Plan on taking a small profit from a small number of trades. Don't think of yourself as a take-off artist; rather, think of yourself as marketing an idea whenever you enter a trade." - Steidlmayer on Markets, by J. Peter Steidlmayer

"Too often thinking about motivation is neglected by the novice trader. Because motivation stimulates and directs behaviour, it has often been described as the incentive to travel the road to our goals. It is the 'why' whereas goals are the 'what.' Lacking motivation is not as bad as not knowing we lack motivation. In the latter case, we will already have set off unprepared down the road to ruin, because self-knowledge will not have informed us that we lack the necessities for reaching our destination." - The Mind of a Trader, by Alpesh B. Patel

"...you must be disciplined in following the plan of your trade religiously. Once you have closed your position, you should record everything about the trade. Write down where you wanted to enter the trade, what you expected out of the trade, and what you actually did get out of the trade. Make sure to include notes that will help you learn from the trade, reasoning what actually took place once you entered the trade. Explain why the trade was a winner or a loser. If you keep detailed records, you can learn from past trades and increase your chances of recognizing your strengths and weaknesses. Build on your strengths and stay away from trades you have demonstrated weakness in." - The Stock Trader, by Tony Oz

"The journal is very basic and includes what trades I made during the day and my reasons for getting into the trade. My journal has changed a little bit over time since my reasons for entering a trade now are pretty consistent. There are two reasons for having a journal, in my opinion. One reason is to have a manual backup in case there's a system or software failure. I had to take advantage of this a couple of times, in one instance where the software recorded the trade twice and put me short a stock by mistake. The second reason that I have kept a journal is for learning and improving as a trader. I go back and review, trade by trade, what I was thinking and doing out of the ordinary in a given week that caused my results to be better or worse than average. And really, I don't need a lot of detail in the journal. For me, just having the trade and the time and any other comments, such as whether it was an active or quiet market, to help me re-live the day." - Albert Mazzone

"Depending on the manner in which it is used, the market may be a tool of either the investor or the gambler. If used in a predetermined, applied, consistent, and well-researched fashion, the market will protect the investor from inflation, help money grow at an above-average rate, and provide retirement security. It is neither the goal nor the ability of gambling to provide these. Motivation is at the heart of this issue. The investor who allows long-term objectives to become obscured can easily become a gambler." - The Investor's Quotient, by Jake Bernstein

"If it was easy to win, there would be more champions. The techniques are simple. The eternal question is how to balance patience and prudence versus going for the home run . . .In trading, pulling the trigger on when to trade is just as important as all the preparation and attention to detail that went before. If a trade does not do well at the start, the trader must be disciplined and have what-if scenarios in place for alternate courses of action. As long as the circumstances for making the trade are still in effect, the trader can stay with the position." - The Education of a Speculator, by Victor Niederhoffer \

"Impulsive people have a way of understanding, and a mode of action, that, in comparison with normal deliberations and intentions, we would consider impaired. This impaired way of behaviour shows itself as lack of control - acting on whim, giving in to temptation, doing what you have told yourself not to do. A person who decides to trade 10 contracts and then trades a 100 lot and says 'I just did it - I don't know why' is acting impulsively.

"All varieties of impulse, whim, or urge are essentially the same: a distortion of normal desires and wants, a sort of seizure that overrides good sense. Impulsive people are not self-confident but simply hope and wish for results. They have no long-term goals, only immediate urges. Their behaviour is abrupt, immediate, and unplanned; the time between thought and execution is very brief. This is not to suggest that quickness in trading is a negative. To the contrary, it is essential to good traders, but the difference is in the size of commitment the person takes on the spur of the moment, and the existence (or absence) of an underlying plan. The net outcome of unplanned behaviour is that when failure occurs, the integrated process malfunctions and the person cannot accrue effective Chapters from the loss. Without a plan, impulsive people can't develop sustained methods to determine what works and what doesn't. They can't understand why they failed, and they can't understand, as good traders do, that a failed plan is beneficial because it leads to avoiding the same mistakes in the future." - Principles of Professional Speculation, by VictorSperandeo

"I know for a fact that my discipline in executing each and every trade according to my trading system is the secret to my success...If you want to improve your trading, what you need to do is very simple. Before you enter any trade, think that you will have to explain this trade to the world in a case study format. You have to explain the reason for entry, your risk management guidelines, and why you exited the trade. If you can truly do this, I h2ly believe that you can enjoy the same type of success I have enjoyed in this challenge." - The Stock Trader, by Tony Oz

"Before you decide you've discovered an easy way to make money solely by shadowing the ticker tape, let me assure you again the obvious hardly ever works in the stock market. Experienced professionals know investors are influenced by big trades appearing on upticks, so don't get too carried away with what could be a well-advertised tape trap. The real problem with tape analysis is the tape reflects all trading, good and bad. Not all of the action you see on the tape is good, sound, correct buying... Another problem with tape watching is it is positively too exciting and emotional. It requires constant discipline to avoid being swept along with the rampant fever when a stock keeps advancing until you're convinced it's going to go 'straight through the roof. "When you get this feeling in the pit of your stomach, the stock is probably topping, since it will also look fantastic to everyone else. When it is that obvious, almost everyone has bought that can buy. Remember, the majority, or crowd, opinion is rarely right in the stock market. "If you sit by the ticker tape too much, you just get too close to the forest to see the trees. And above all, the most important things a winner must have in the stock market are perspective, discipline, and self-control." - How To Make Money in Stocks, by William J. O'Neil

"I know for a fact that my discipline in executing each and every trade according to my trading system is the secret to my success... If you want to improve your trading, what you need to do is very simple. Before you enter any trade, think that you will have to explain this trade to the world in a case study format. You have to explain the reason for entry, your risk management guidelines, and why you exited the trade. If you can truly do this, I h2ly believe that you can enjoy the same type of success I have enjoyed in this challenge." - The Stock Trader, by Tony Oz

"Traders who lose follow one of several typical patterns. Some repeatedly suffer individual large losses that wipe out earlier gains or greatly increase a small loss. Others experience brief periods during which their trading wheels fall off; they lose discipline and control and make a series of bad trades as a result. The wise trader makes many small trades, remains involved and constantly maintains and sharpens his feel for the market. For all of his work, he hopes to receive some profit, even if it is small in dollar terms. In addition, continual participation allows him to sense and recognize the few real opportunities when they arise. These generate the large rewards that make the effort of trading truly worthwhile." - Steidlmayer on Markets, by J. Peter Steidlmayer

"There are numerous similarities between the serious trader and the serious gambler. In the casino, the difference between the winner and the loser is that the former leaves the table when he has reached his goal for the session, and the latter leaves when he has lost his stake. Most gamblers, like many traders, don't realize that the only way they can stop gambling is by losing." - The Mind of the Markets, by F. J. Chu

Effort

"Satisfaction lies in the effort, not in the attainment. Full effort is full victory." - Albert Einstein

Ego

"Your ego is both inspiring and full of deceit. On the surface, it appears to be helping you, it gives you small boosts of gratification when you succeed. However, it is also one of the biggest hindrances you will face in life. You see your ego just wants you to be safe, to have fun and to be the best … your ego hates failure, it loathes nothing more, and this is where most people go wrong". - Anonymous

"I became a winning trader when I was able to say, "To hell with my ego, making money is more important." - Marty Schwartz

"One thing I know for sure: yourself concept has to be separate from your trading. You began as an individual long before you ever thought of trading. And you exist as an individual beyond the time you spend trading. When personal self-worth gets tangled up with your trading, it not only damages your concept of your personal worth, it sabotages your trading. You must not internalise the mistakes you make. You must learn to divorce your ego from your trading". - Joe Ross

"Ask yourself whether the market damaged your financial security or only deflated your ego. If the market has damaged your finances, you'll have to save more, or spend less. But don't worry about your ego. In time it will inflate to its former size." - Ken Homa

"In this world, man has two significant possessions: intelligence and emotion. These two possessions govern our day-to-day life. But very often we see that emotion (ego) gets the upper hand in our life. We know that even if someone is extremely intelligent, when his emotion comes to the fore it will devour him. He is compelled to do what his emotion asks him to do."- Sri Chinmoy

"Ego is the Ebola virus to the active trader. There is an antidote, however: humility. At the onset of paralysing ego, humility must be administered at once, or results can be fatal. It is even more effective if administered in advance, not unlike vaccine. Can you or I become infected? Of course. What can be done to protect against ego and its devastating effects? Pay close attention to the following four areas: self-knowledge, market knowledge, trading strategy and risk management. Answer the hard questions for yourself, before the market does. Like meditation, or exercise, attention must be paid each day for maximal effectiveness." - John A Sarkett

"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. (But) 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

"Remember, when the market corrects itself, which it always does, no position is immune, no matter how h2ly your ego may be tied to it." - David Jenyns

"You must learn to realise that you cannot make the market go your way, you must go the market's way and must follow the trend." - WD Gann

Emotional pain

"Avoiding the emotional pain of regret causes you to sell winners too soon and hold on to losers too long." - Investment Madness, by John R. Nofsinger

Factually right

"You're neither right nor wrong because other people agree with you. You're right because your facts are right and your reasoning is right - and that's the only thing that makes you right." - Warren Buffett

Fate

"Man blames fate for other accidents but feels personally responsible for a hole-in-one." - Martha Beckman

Frustration tolerance

"People experience frustration when they feel their goals have been thwarted. There are many times during the trading day that events go against us as we try to execute a trading strategy. We may not get the price we want, or we may not be able to exit the way we had planned. The extent to which one reacts to these setbacks with frustration will predict trading success." - Source Unknow

Fundamentals

"Stock prices are anchored to "fundamentals" but the anchor is easily pulled up and dropped in another place. Given that expected growth rates and the price the market is willing to pay for growth can change rapidly on the basis of market psychology, the concept of a firm intrinsic value for shares must be an elusive will-o-the-wisp." - Burton Malkiel

"Investors will not wake up one day and realise that the stock you're considering is too cheap. Stock price surges require some sort of stimulus, such as an unanticipated pickup in demand or a takeover bid." - Martin Fridson

"Detailed analysis of (year-on- year) change in a company's net cash position is neglected at one's peril. Companies have huge leeway to make their profits what they want them to be. Any sensible (finance director) will maintain a stockpile of provisions available for release as and when required. Earnings growth is therefore the meaningless difference between two numbers that have been manipulated. Cash is fact, not opinion, and therefore more difficult to manipulate."- Nigel Davies

Group pressure

"Conforming to group pressure is a ubiquitous phenomenon. In the markets, many people "follow the herd" rather than plot their own course. It's especially difficult to go against group opinion in the market, when you have your money on the line. You may have developed an investment strategy that suggests that a stock price will increase, but it's hard to stick to that strategy when everyone else is selling. There is safety in numbers. The most successful investors, however, don't conform to group pressure. They stick to their investment plan, regardless of what other investors are doing. How much of a conformist are you?" - Source Unknown

Handling success

"Success is a combination of merit, luck, and the relative absence of unconscious inner obstacles, but the last of that triad is perhaps the primary culprit responsible for the majority of failures. In fact, everybody is a success. That startling declaration rests on the fact that unconsciously, we basically get what we want. The primary problem is that once obtained, we realise that what we got is not what we truly wanted, resulting in boredom, escapism, mysterious fatigue, migraines, and the much-dreaded 'midlife crisis.' We're pretty good at getting what we think we want in life; the real problem is ascertaining what it is that we really want. The unconscious is a compelling force within the essence of our ego; it operates on a level that is invisible and all-powerful, such that growing up intellectually does not mean we necessarily grow up emotionally. Some people overcome their infantile fantasies and others do not, resulting in the normal and the neurotic - even though neither person any longer consciously demands the impossible. Excessively blaming parents is a hallmark of the latter." - Mass Psychology, by James Dines

"As we've seen...the danger once you've ridden a good move is arrogance. You get to think you're smart, and all you need to do is trade to make money. The old cliché has it that it's much easier to make money than to keep it. And the cliché is dead right for this phase in the trading cycle. There is nothing easier than to give back in a consolidation all that you've made in a good move. You're thinking in terms of bigger stakes. You're careless. You're on a roller. You get reckless; and you fall to pieces. Very disciplined traders may be able to handle this phase, but for lesser mortals, the best discipline is to get out and wait for the market to tip its hand again, the way it did when you made your original play for the move." - The Way of the Dollar, by John Percival

"In order to be a successful trader, you must be free to trade. In order to trade, you must understand and be able to defend yourself in the battle of ideas. Also, you must feel that making money is perfectly moral, and the choice of how much to make is yours. Lastly, you must believe that you don't owe society your life, and that other people do not owe you theirs." -Principles of Professional Speculation, by Victor Sperandeo

"What drives a bull market is not so much greed as grandiosity. When prices continue to escalate, investors begin to feel like Icarus - they feel increasingly excited and capable of flying higher and higher. So long as these beliefs are harnessed to a larger rational plan that joins correct data to a grandiose project, these flying fantasies will fuel realistic ambition, for the narcissistic enhancement that comes from this coupling leads to normal psychological buoyancy and pride. Where grandiosity is split off from normal reasoning, however, increasing deficits in investment reality testing will be seen. In the case of greed, the inherent compulsion to make up for deprivation always contains a lack of reality testing and eventually contributes to the investor's downfall...Those whose greed is fuelled by archaic grandiosity tend to be continual losers in the market, while appearing outwardly as extremely successful." - The Psychology of Investing, edited by Lifson and Geist

"Consistency in day trading will come from sticking to a money management plan. The market can be extremely humbling. Many traders take all the credit when they are successful and blame the market when they are not. The reality is that, with few exceptions, your trades will never really change the market. Your 1000 shares of Intel have almost nothing to do with the stock's next move. The market will function with you or without you. It doesn't matter if you made millions for the last 10 years straight - it is essential to define what you are willing to risk now and stick with it. The main reason that most traders fail after great successes is that their egos drag them down. They get full of themselves." - Electronic Day Traders' Secrets, by Friedfertig and West

"During the 10 years I traded for George Soros, I never heard him speak once about a winning trade. To hear him talk, you'd think he had had nothing but losers. Conversely, listening to the biggest losers, you'd think they had nothing but winners...Soros gave me this advice on an occasion when I had scored a big win for him: 'Climb off your horse. You're only as good as tomorrow's trade. Why are you always fighting the trend? Why do you make it so hard for yourself? Are you a masochist?" - The Education of a Speculator, by Victor Niederhoffer

"Ego is another problem. Ego can be devastating. I firmly believe that if you have an ego when you're trading the markets, you will potentially give back what you've made. Ego will keep you in when you're supposed to get out." - Investment Madness, by John R. Nofsinger

"Those involved with the speculation are experiencing an increase in wealth - getting rich or being further enriched. No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition. The very increase in values thus captures the thoughts and minds of those being rewarded. Speculation buys up, in a very practical way, the intelligence of those involved." - John Kenneth Galbraith, A Short History Of Financial Euphoria

"When investors are hot-when they make several investment choices that perform exceedingly well-there is a rekindling of primitive grandiosity. They feel like the basketball player whose every shot floats gracefully through the net in the first half of the game. Invincible, brilliant, and master stock pickers, such investors can do no wrong, make no mistakes. Risk, they believe, is for the faint of heart. They make such insightful decisions that they need not consider the idea of risk. The brilliant investor feels analogous to the child or the adolescent whose grandiose fantasies confer a sense of invulnerability. There is thus a particular kind of risk-an accident proneness or an error proneness-common to brilliant investors that tends to account for a regression to the mean in long-term performance...Only in those few investors such as Warren Buffett, who have their grandiosity well contained, can outstanding performance be maintained." - The Psychology of Investing, edited by Lifson and Geist

"Don't be a hero. Don't have an ego. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead. Jesse Livermore, one of the greatest speculators of all time, reportedly said that, in the long run, you can't ever win trading markets. That was a devastating quote for someone like me, just getting into the business. The idea that you can't beat the markets is a frightening prospect. That is why my guiding philosophy is playing great defence. If you make a good trade, don't think it is because you have some uncanny foresight. Always maintain your sense of confidence, but keep it in check...I am more scared now than I was at any point since I began trading, because I recognize how ephemeral success can be in this business. I know that to be successful, I have to be frightened. My biggest hits have always come after I have had a great period and I started to think that I knew something." (Paul Tudor Jones) - Market Wizards, by Jack Schwager

"Those involved with the speculation are experiencing an increase in wealth - getting rich or being further enriched. No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition. The very increase in values thus captures the thoughts and minds of those being rewarded. Speculation buys up, in a very practical way, the intelligence of those involved." - John Kenneth Galbraith, A Short History Of Financial Euphoria

"Consistency in day trading will come from sticking to a money management plan. The market can be extremely humbling. Many traders take all the credit when they are successful and blame the market when they are not. The reality is that, with few exceptions, your trades will never really change the market. Your 1000 shares of Intel have almost nothing to do with the stock's next move. The market will function with you or without you. It doesn't matter if you made millions for the last 10 years straight - it is essential to define what you are willing to risk now and stick with it. The main reason that most traders fail after great successes is that their egos drag them down. They get full of themselves." - Electronic Day Traders' Secrets, by Friedfertig and West

"When you get successful you tend to get sloppy and I think I've been able to overcome that. You overcome it because you kind of outgrow it. When I invest now, I don't get happy, and I don't get sad. I really don't get excited or feel any emotion. I'll come home and tell my wife, 'Hey honey we made $40,000 today,' or whatever, and she'll be jumping up and down and I'll just be cold fish, my face doesn't change. I'm thinking to myself, we could lose it all tomorrow, (laughs). You're thinking, what do I do now, what's the next strategy. You become more business like, which takes the fun out of it, but I think that's what you ultimately have to do, if you're going to do this for a living. I think if you go to the floor of the exchanges most traders are this way." - Mike McDonald

"What drives a bull market is not so much greed as grandiosity. When prices continue to escalate, investors begin to feel like Icarus - they feel increasingly excited and capable of flying higher and higher. So long as these beliefs are harnessed to a larger rational plan that joins correct data to a grandiose project, these flying fantasies will fuel realistic ambition, for the narcissistic enhancement that comes from this coupling leads to normal psychological buoyancy and pride. Where grandiosity is split off from normal reasoning, however, increasing deficits in investment reality testing will be seen. In the case of greed, the inherent compulsion to make up for deprivation always contains a lack of reality testing and eventually contributes to the investor's downfall...Those whose greed is fuelled by archaic grandiosity tend to be continual losers in the market, while appearing outwardly as extremely successful." - The Psychology of Investing, edited by Lifson and Geist

"As we've seen...the danger once you've ridden a good move is arrogance. You get to think you're smart, and all you need to do is trade to make money. The old cliché has it that it's much easier to make money than to keep it. And the cliché is dead right for this phase in the trading cycle. There is nothing easier than to give back in a consolidation all that you've made in a good move. You're thinking in terms of bigger stakes. You're careless. You're on a roller. You get reckless; and you fall to pieces. Very disciplined traders may be able to handle this phase, but for lesser mortals, the best discipline is to get out and wait for the market to tip its hand again, the way it did when you made your original play for the move." - The Way of the Dollar, by John Percival

"You hold on to a losing position because deep down inside, you don't want to win. Sound ridiculous? Then why keep a loser when every adviser and statistic tells you to get rid of it? Because of events that took place early in your life - often an intensely competitive relationship with a same-sex parent - you're afraid of doing well." - The Psychology of Smart Investing, by Ira Epstein & David Garfield

Herd mentality

"Why complicate your life by digging for more information and considering the pros and cons - with the risk of being wrong - when it's much easier to do what other people in the neighbourhood are doing and to think like them? After all, there must be a reason for their behaviour and thoughts."- Anonymous.

"The crowd tends to follow the wrong signs near the market tops and bottoms." - Marty Zweig

"The stock market works well most of the time. It is a decentralised mix of enthusiasm and scepticism, longs and shorts - a global conflict of opinion and judgement that keeps prices within a reasonable approximation of value. Yet speculation at times spirals out of control, and the market becomes a single-minded mob." - James Surowiecki

"The secret, I think ... to buy stocks at a bargain price, you have to do the opposite to the crowd. When you're going to the same meetings with the other people in Manhattan it's hard to be different." - John Templeton

"People get carried away. They hear stories of their neighbours getting rich and they want a piece of the action. They figure, somehow, that the price of stocks (1929) or dotcom start-ups (1999) or real estate (2006) can only go up. A symptom of this crowd psychology is that the typical investor displays exquisitely bad timing. The economist Ilia Dichev of the University of Michigan has calculated 'dollar-weighted' returns for major stock indices; this is a way of adjusting for investors rushing into the market at certain times. It turns out that 'dollar-weighted' returns are substantially lower than 'buy and hold' returns. In other words, investors flood in when the market is near its peak, tending to buy high and sell low. The herd instinct seems to cost us money."- Tim Harford

"Fight the crowd. It is warm and fuzzy in … crowds … you do not need to be warm and fuzzy with investing." - Seth Klarman

"There is no doubt that there are many more 'investment professionals' and way more IQ in the field, as it didn't use to look that promising. Investment data are available more conveniently and faster today. But the behaviour of investors will not be more intelligent than in the past, despite this. How people react will not change — their psychological make-up stays constant. You need to divorce your mind from the crowd. The herd mentality causes all these IQs to become paralysed. I don't think investors are now acting more intelligently, despite the intelligence. Smart doesn't always equal rational. To be a successful investor you must divorce yourself from the fears and greed of the people around you, although it is almost impossible." - Warren Buffett

"Nor will I buy market- favoured stocks. I particularly notice it when I attend meetings for technology stocks and see all the people crowding into the room and so on. If there's standing room only, that's usually a pretty fair sign it's not a good time to buy the stock." - Phil Fisher

Heroes

"Heroes are myths. The great investors of the past were mostly innovators. If they were alive today they wouldn't do it now the way they did it then.… Almost everything from the past is obsolete ... it is a mistake to say things like, "I want to be an investor like Ben Graham" because he wouldn't do it now like he did it then." - Kenneth L Fisher

Hesitation

"Conditions are never just right. People who delay action until all factors are favourable do nothing."- William Feather

"So don't buy stock when you don't know where it's coming from and you don't know what it's doing. Take profits when you can, not when you have to. When a trade is in your favour, take profits. At a minimum, sell half. When a trade turns against you, you're not better than the market - just get out. Simple stuff. But you know what? Nobody follows it. Including me." - Electronic Day Traders' Secrets, by Friedfertig and West

"Successful investors strike a balance between thought and action, between research and intuition. At some point, they have to shove their intellectual activity aside and move. As the old saying goes, he who hesitates is lost." - The Psychology of Smart Investing by Ira Epstein and David Garfield

"Fear is the most debilitating of emotions because it shrinks from confrontation with its object. This withdrawal lends itself to the formulation of fantasies which are difficult to disengage from. In its inability to confront reality, fear is the source of all chronic feelings of inadequacy and inner emptiness. The main problem with fear is that it is self-reinforcing. When we act upon the basis of fear, the fear increases." - The Mind of the Markets, by F. J. Chu

"There is a fine line between stubbornness and conviction. Day traders are in essence moving targets that are not attached emotionally to any stock. They are (or are supposed to be) objective, and while having conviction in the tools and trend at a given moment, day traders will not hesitate to take a stop, without even a second thought when a trade turns bad." - The Undergroundtrader.com Guide to Electronic Trading, by Jea Yu

"I think that one of the most difficult things for me is being aggressive. I find that I'm not a naturally aggressive person. I was never a star athlete, or anything like that, so I don't have that attacking-type of personality. It's always been hard for me to jump in there. Oftentimes, when I see what looks like a good opportunity, I don't take the trade right away because I'm too - and I don't want to admit it - but it's really because I'm too scared. I don't want to risk losing money. Unfortunately, those times are usually the best trades. That's one thing that I've been working on - becoming aggressive and taking the trade." - Source Unknown

"Now, there are several major problems that result when fear becomes a motivation to do or not do something. First it will limit your range of perceived opportunities by narrowing your focus of attention, keeping it on the object of your fear...Your fear will systematically exclude from your awareness market information that would indicate the existence of other alternatives and opportunities...Fear will also limit your range of responses to any given situation. Many traders suffer considerably when they know exactly what they want to do but, when the moment arrives, find themselves completely immobilized." - The Disciplined Trader: Developing Winning Attitudes, by Mark Douglas

"Before anyone can become successful in an environment with the unstructured character of the trading environment, one needs to develop a supreme sense of self-confidence and self-trust. I am defining self-confidence as an absence of fear and self-trust: knowing what to do at the moment when it needs to be done, and then doing it without hesitation."- The Disciplined Trader: Developing Winning Attitudes, by Mark Douglas

"According to folklore, greed and fear drive financial markets. But this is only partly correct. While fear does play a role, most investors react less to greed and more to hope. Fear induces an investor to focus on events that are especially unfavourable, while hope induces him or her to focus on events that are favourable." - Beyond Greed and Fear, by Hersh Shefrin

"The effects of fear on one's behaviour are obvious, limiting one to the point of complete immobility. If you can't execute your trades properly, even when you perceive the most perfect opportunity, it is because you have not released yourself from the pain contained in the memories of past trading experiences and because you still don't trust yourself to act appropriately in any given set of conditions. If you did, there would be no fear or immobility." - The Disciplined Trader: Developing Winning Attitudes, by Mark Douglas

"...trading is far more an art than a science. When a trader makes a decision, he never fully knows why he is making that decision. You have to think about your trade and the market night and day, but at some point you want to pull the trigger. You have thought of hundreds of things over the previous few days, so that if I ask you, 'Why are you buying or why are you selling? ' you will not be able to give a good answer. You may be able to give a few reasons, but that will not be the full answer. The entire message is everything you have thought about over the last three days, and that would take three days to explain. A lot of it is subconscious. You do not really know why you are pulling the trigger. To that extent it is more an art than a science, because you cannot fully demonstrate why you are doing what you are doing." - The Mind of a Trader, by Alpesh B. Patel

"When I've observed other traders, the best ones are always aggressive. They don't even think about the trade, they just do it. And that's a trait that I really admire. But the thing is, they're aggressive and they take care of their capital. They're only aggressive when they perceive a good opportunity. As soon as the opportunities disappear, or if they're losing money, then they stop. It's seems like a kind of a switch that they can turn on and off, which I think is a really good thing." - Michael Friesen

"Be flexible. My philosophy has necessarily changed from time to time because of events and because of mistakes. My views change as economic, political, and technological changes occur both on and now off our planet. It is imperative that you be willing to change your thoughts to meet new conditions." - The Investor's Anthology, by Charles D. Ellis

"Before anyone can become successful in an environment with the unstructured character of the trading environment, one needs to develop a supreme sense of self-confidence and self-trust. I am defining self-confidence as an absence of fear and self-trust: knowing what to do at the moment when it needs to be done, and then doing it without hesitation." - The Disciplined Trader: Developing Winning Attitudes, by Mark Douglas

Hindsight

"Hindsight is an exact science."- Guy Bellamy

History

"History would be wonderful thing - if it were only true." - Leo Tolstoy

Humility

"Humility leads to strength and not to weakness. It is the highest form of self-respect to admit mistakes and to make amends for them." - John (Jay) McCloy

Ignorance

"I know nothing except the fact of my ignorance." – Socrates

Imposter phenomenon

"Do you ever feel as if you are an imposter? Psychologists have been studying a phenomenon called the "Imposter Syndrome." Some very successful people believe that they are imposters. They believe that they are successful because of an accident or luck, rather than their hard work and effort. Successful investors may be prone to experience the imposter syndrome. In the general public, people associate the markets with the lottery or gambling. Many people believe making a profit on a trade is a matter of pure chance or good fortune, rather than solid preparation and hard work. Even professional investors and traders may believe in luck or chance as a logical explanation for their winnings." Source Unknown

Improving brain function

"We all want a brain that stays healthy when we're older, but we also want a brain that's working at top speed and efficiency today. Breakfast is the most important meal of the day. Start out the day with a meal that is low in fat, high in protein and low in carbonates and sugar. This will help you achieve peak mental performance during the day. Specifically eat protein first and then complex carbohydrates in your meal. The way we eat cannot only help us be more intelligent, alert and successful in mental activities, but also more balanced in our emotions and behaviour. The way to build a foundation for a healthy brain is with a healthy diet and supplementation." - Source Unknown

Independent thinking

"(John) Templeton notes, 'Simple common sense tells you that the lowest price for an asset can occur only when the maximum number of owners are pessimistic.' It has to be that way; it can be no other. If 10 doctors tell you to take a certain medication, you'd be wise to take it. If 10 civil engineers tell you to build a bridge a certain way, then you should build it that way. But in selecting securities, consensus is dangerous. Adds Templeton, 'If ten security analysts tell you to buy a certain asset, stay away. That popularity must be already reflected in a high price." - The Psychology of Investing, edited by Lifson and Geist

"Group members may catch a few trends, but they get killed when trends reverse. When you join a group, you act like a child following a parent. Markets do not care about your well-being. Successful traders are independent thinkers." - Trading for a Living, by Alexander Elder

"Never forget that markets are made up of people. Think constantly about what others are doing, what they might do in the current circumstances, or what they might do when those circumstances change. Remember that whenever you buy and hope to sell higher, the person you sell to will have to see some opportunity at that higher price in order to be induced to buy." - Steidlmayer on Markets, by J. Peter Steidlmayer

"A speculator should never be tempted to give up his flexibility. If he gets himself locked into an investment, or deprives himself of freedom to change his mind, he is giving up his stock in trade." - Trader's Manifesto, by Donald Worden

"Remember that a trader is someone who does his own homework, has his own game plan, and makes his own decisions. Only by acting and thinking independently can a trader hope to know when a trade isn't working out. If you ever find yourself tempted to seek out someone else's opinion on a trade, that's usually a sure sign that you should get out of your position." (Linda BradfordRaschke) - The New Market Wizards, by Jack Schwager

"If we uncritically accept whatever values or ideas we've been taught by parents, teachers or church, never questioning these ideas or asking ourselves if these ideas really make sense, then we are dependent thinkers (even if the ideas are true!). If we reject what our parents, teachers or church have taught us simply because they say something is right, does that make us independent thinkers? No, that's just what psychologists call "anti-conformity" rather than non-conformity. Making up your own mind is an action, not a reaction." - Source Unknown

"When forecasters have too much information, they often become even more inaccurate than when there is too little. Research on horse handicappers and other studies indicate that only early information affects one's decisions. Once the decision is made, additional information, even when contradictory, will not cause the person to change his mind. In fact, as more and more information becomes available, it only reinforces his belief. Additional information does not increase the quality of decision-making, only the certainty of conviction. It only adds a false sense of security." - The Tao Jones Averages, by Bennett W. Goodspeed

"Emotional Stability. Although akin to patience this trait is broader in scope. Initially, it is needed to prevent the investor from being engulfed in waves of optimism and pessimism that periodically sweep over Wall Street. Moreover, it is required to separate the facts from the entangled web of human emotions. Bernard Baruch said once that most facts reach Wall Street through 'a curtain of human emotions,' and even sophisticated professionals in Wall Street find difficulty in distinguishing fact from emotion." - The Investor's Anthology, by Charles D. Ellis

"Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. You need to believe in something, but at the same time, you are going to be wrong a considerable number of times. The balance between confidence and humility is best learned through extensive experience and mistakes. There should be a respect for the person on the other side of the trade. Always ask yourself: Why does he want to sell? What does he know that I don't? Finally, you have to be intellectually honest with yourself and others. In my judgment, all great traders are seekers of truth." (Michael Steinhardt) - Market Wizards, by Jack Schwager

"I never buy stocks on tips, romours, or inside information. It simply is an extremely unsound investment practice. Of course, tips, romours, or inside information seem to be what most people are looking for. But, again, what most people believe and do in the market doesn't work; so beware! Certain advisory services and some daily business newspapers carry regular columns fed by Street gossip, romours, tips, and planted personal opinions or inside information. This, in my opinion, is not the most professional approach, nor is it too sophisticated. There are far sounder and safer methods of investing in the stock market." - How To Make Money in Stocks, by William J. O'Neil

"In the stock market, resistance to change - or inflexibility - is an investor's worst enemy, because change is constant. For example, when a stock goes from 10 to 30, a subsequent drop to 20 somehow makes it look under-priced - that 20 is higher than 10 does not alter the "bargain" aspect! A subsequent rise to 30 makes it look "too high" ... Variations from a fixed level or "Reference Point" always look wrong, and are psychological derivants of the Anti-Change Concepts lodged in the Mass Mind." - Mass Psychology, by James Dines

"My ability to adjust my trading strategy to the type of market I'm working with in the here and now has been a key to my success. Working with an evolving market allows one to make changes; studying past markets doesn't. Continual adjustment is at the heart of being a good trader."- Steidlmayer on Markets, by J. Peter Steidlmayer

Investment advice

"If investing is not your profession … at the end of the day, you're going to have to trust someone. So there are four or five simple rules: You have to study the paper trail … read what the fund had to say before a difficult period. See how the fund behaved during a very stressful period. It all comes out in tough times. And also you want to make sure that whoever is managing your money has most of their family net worth in the same investments, because if it's going to be good enough for you, it better be good enough for them. Of course you want integrity, a smart crook is going to get you every time. The last is you have to have a layman's understanding of the strategy. You must have a basic grasp of what the manager is trying to do. If you don't, you will be shaken out at the worst possible time … you have to get those five or six dynamics, then you just have to trust someone." - Bruce Berkowitz, The Fairholme Fund.

"About one in five attempts to beat the market over time will succeed. This applies to mutual funds. It applies to investment advisers. It applies to portfolio managers. And knowing these odds is the first step toward acquiring investment wisdom." - Mark Hulbert, The Hulbert Financial Digest.

"Occasional outbreaks of those two super contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore, never try to anticipate the arrival or departure of either. Simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." - Warren Buffett, Berkshire Hathaway.

"Despite volumes of research attesting to the meaninglessness of past returns, most investors (and personal finance magazines), seek tomorrow's winners among yesterday's. Forget it." - Fortune magazine.

"Individual decisions can be badly thought through, and yet be successful, or exceedingly well thought through, but be unsuccessful, because the recognised possibility of failure in fact occurs. But over time, more thoughtful decision-making will lead to better results, and more thoughtful decision-making can be encouraged by evaluating decisions on how well they were made rather than on outcome." - Robert Rubin, former treasury secretary.

"It cannot be possible to make reliable predictions about when the stock market will rise or fall. If it were possible, the market would respond in advance and it could not then rise and fall in the way it does. The fact that market timing must be unpredictable, but that investors clamour to know when things will happen, is probably the single main reason why so much nonsense is written about the stock market. It is an old English adage that a silly question will get a silly answer." - Andrew Smithers. Smithers & Co.

"94% of people in the stock market, professionals and amateurs alike, simply have not done enough homework." - William O'Neil, William O'Neil & Co.

Investment psychology

"How important do you think investment psychology is? I think it is 90% of the experience. The psychological aspect involves mental preparation for the possibility of being wrong, or having to cut back when trades are not working right. Also, it is crucial to recognize when factors in your life are really detrimental to your trading, such as an argument with your spouse, a divorce, or a drinking problem. You have to maintain a positive attitude, no matter what, even when the wolves are at the door. The psychology is also related to the physical part of trading. You have to be physically fit, like a boxer or a tennis player. You should have a good night's sleep. You should not drink any alcohol from Saturday night until the close of trading on Friday." - Larry Pesavento

Joyous optimism

"It's a simple but difficult truth that we have no control over how the world treats us, only over how we react to it. The old "glass half full / half empty" notion crops up in situation after situation. Successful traders tend to see more opportunities than disappointments, which many people believe to be one of the reasons why they're successful." - Source Unknown

Keep your goals in sight

"They urged her not to quit. She never had...until then. With only a half mile to go, she asked to be pulled out. Still thawing her chilled body several hours later, she told a reporter, "Look, I'm not excusing myself, but if I could have seen land I might have made it." It was not fatigue or even the cold water that defeated her. It was the fog. She was unable to see her goal." - Source Unknown

Learning

"The beautiful thing about learning is that no one can take it away from you." - B.B. King

"Losing does not eat at me the way it used to. I just get ready for the next play, the next game, the next season." - Troy Aikman

Limits

"If you limit your choices only to what seems possible or reasonable, you disconnect yourself from what you truly want, and all that is left is a compromise." - Robert Fritz

Logical argument

"The sounder your argument, the more satisfaction you get out of it." - Edgar Watson Howe

Maintaining a healthy attitude

"Our ability to maintain a healthy attitude may be challenged when we feel a loss of control such as when we feel we are not where we would like to be in our lives. Studies have shown that people who believe that they have control of events in their lives maintain a better quality of life and better health as they grow older and experience change." - Source Unknown

Make the time

"Even the most dependable of men will stumble every now and then, after all. He'll trip over his own shoes, waylaid by bumps in the road or circumstances he never expected; he'll throw off the bonds of both caution and common sense. Fortunately, Jorie and Ethan's son was on his way to school on this Monday of the last week of sixth grade, for there was nothing that could have kept Ethan away from Jorie on this day, not when he felt the way he did." - Source Unknown

Managing risk

"When you manage risk, you always have to think of what would happen should something go wrong." - The Stock Trader, by Tony Oz

Mind

"The mind has exactly the same power as the hands: not merely to grasp the world, but to change it." - Colin Wilson

Mistakes

"Every great mistake has a halfway moment, a split second when it can be recalled and perhaps remedied." - Pearl S. Buck

"The story of Thomas Edison is legendary, where a particular gentleman enquired of the inventor how it felt to have failed so many times in his efforts to produce an electric light bulb. Edison replied that he had not failed at all, but rather he had successfully found thousands of ways how not to make a light bulb! That kind of healthy attitude toward mistakes enabled Edison to make a contribution to the world that rivals that of almost anyone in history." - Source Unknown

Moderation

"Moderation is the secret of survival." - Manly Hall

Money management and systems

"Money management without a method or system to trade is useless. Further, trading a method with a negative mathematical expectation is practically useless as well." - The Trading Game, by Ryan Jones

Motivation to achieve

"A man is rich in proportion to the number of things he can afford to let alone." - Henry David Thoreau

"It has long been recognized that an inner desire and drive is required for successful performance. What is the essence of the quest for success? What makes traders tenaciously struggle to refine technique, improve strategy, and strive for the summit? Let's consider several factors underlying the motivation to achieve, and how these elements may impact performance." - Source Unknown

Naps vital for efficient brain function

"All you have is now. The measure of our peace of mind and the measure of our personal effectiveness are determined by how much we are able to love in the present moment. Regardless of what happened yesterday and what might happen tomorrow, NOW is where you are. From this point of view, the key to happiness and contentment must be in focusing our minds on the present moment!" - Source Unknown

Opportunities

"The best investments are often the ones you did not make. To make a really good investment … is like finding a needle in a haystack. Most "hot tips" and "must buys" or "great opportunities" turn out to be disasters. Only take very few investment decisions, which you have carefully analysed and thought about in terms of risk and potential reward." - Marc Faber

"Loss of opportunity is preferable to loss of capital. There was a time when I felt it was my duty to be personally involved in every wrinkle of the S&P. I've traded this market since its inception … but it took quite a while for me to realise that picking safe, readable and high-probability winning trades was the way to go."- Joe DiNapoli

"The best oil exploration deals never get sold outside of Texas. Organisers of limited partnerships can ordinarily raise all the money they need among their close friends, assuming they have genuinely good prospects. If you are a stranger with a modest sum to invest, the fact that you are being offered the "opportunity" to participate is a reason to be sceptical." - Martin Fridson

Optimism

"Optimists are individuals who persist even when they are facing setbacks. Losses don't get them down. Indeed, when they encounter losses, they work especially hard. They live by the motto, "When the going gets tough, the tough get going." Successful traders view losing trades as merely part of the learning process, and the money they lose on trades as a type of school tuition they must pay for their trading education. See where you stand on the scale, and what you should do to improve." - Source Unknown

Patience

"Exasperation is the mind's way of spinning its wheels until patience restores traction."- George L. Griggs

"Patience is passion tamed."- Lyman Abbott

Perfection

"You can spend a lifetime, and, if you are honest with yourself, never once was your work perfect." - Charlton Heston

Prosperity

"Blessed is he who has reached the point of no return and knows it, for he shall enjoy living." - W. C. Bennett

"Prosperity in the form of wealth works exactly the same as everything else. You will see it coming into your life when you are unattached to needing it." - Wayne Dyer

Prudent man's losers game

"The fish, feeling safe with the endorsement of one of the biggies, within seconds had transformed the pond into churning white water as it was every trout for himself. With a worm on the boys hook, it was a slaughter, as the trout now operated under the illusion of safety. The boy soon stood proudly in front of the owner's door with a string of fifteen three-to-five-pounders." - Source Unknown

Quitting

"Pain is temporary. Quitting is forever " - Lance Armh2

Right side of the market

"They say there are two sides to everything. But there is only one side to the market; and it is not the bull side or the bear side, but the right side." - Reminiscences of a Stock Operator, by EdwinLefevre

Risk control

"Take calculated risks. That is quite different from being rash." - General George Patton

"Who dares nothing, need hope for nothing."- Johann Von Schiller

"Risk and money management take discipline to implement. In fact, managing risk goes against the grain of our natural impulses. Prospect theory demonstrates that people have a natural tendency to become risk seeking after a series of losses and to become risk averse to protect a gain. Our nature is to double our bets when we are losing and to take quick profits when we are winning. But doing so virtually guarantees that we will chase good capital after bad and end up under-funding winning trades. Successful and profitable trading comes from doing what does not come naturally." - The Undergroundtrader.com Guide to Electronic Trading, by Jea Yu

"Trust your hunches. They're usually based on facts filed away just below the conscious level". - Dr. Joyce Brothers

"Let us not look back in anger or forward in fear, but around in awareness."- James Thurber -

"One of my weaknesses as a trader is that when a position is moving in my direction I look at it in dollar terms. In other words, it's ticking by on my screen in dollars, and I know this is a bad thing and that I need to look at it in terms of whether this is a good trade or a bad trade. How many points am I making off this trade? What kind of return am I getting on the money that's invested in this trade? Instead, I look at it as dollars because I see dollars totalling on my P&L on my computer screen. If I've got a trade in for a minute and a half, and I start seeing a gain of two hundred and fifty, three hundred dollars, four hundred and fifty, five fifty - I'm tempted to take the money and run. Even though it has more to go and technically the chart says it's probably going to go higher, I'll jump in, cut that trade, and take the money. I feel a lot of regret when I do that, because it could run another five, six points." - Dave Alexander

"These faults can be found in many traders and investors: Do not be careless or reckless with your trading. You trade for profit, not for fun and games. Do not be timid; once you have identified an opportunity, attack it. Act on it. Do not get angry over a losing trade and swear to get even. You won't. Do not get down on yourself for a losing trade, or even a string of losing trades. Find out what you are doing wrong and correct the problem. Do not fall in love with a stock, a bond, or anything else. You must learn that this is conflict, and you must be rather mercenary with your trading and investing." - Sun Tzu's Art of War for Traders and Investors, by Dean Lundell

"A stop automatically takes your brain out of reverse and puts it into neutral. Your money's not back to neutral, but your mind's back to the point where you can regroup and try to think up a fresh idea without the pressure of a losing position hanging over your head." - Pit Bull, by Martin Schwartz

"If we change the definition of risk to encompass not only volatility as an external property of the market, but also certain properties of the self, then we begin to ask different and novel sorts of questions: Do I experience time as passing slowly or quickly? Do I have any unresolved real or emotional losses? What is my tolerance for sudden change? What is my propensity for shame? Can I tolerate uncertainty without undue anxiety and denial? Do I have more faith in my own judgement that in others?" - The Psychology of Investing, edited by Lifson and Geist

"Accordingly, as every investor eventually learns, the more you know, the more you feel you need to know. Often, the more you know, the less good it does you, because it begins to inhibit. But how can you take a risk, if you don't know enough? It's easy to berate and deride other approaches - fundamentalist, economist, monetarist - for failing us like weathermen. Their basic flaws, obviously, are in believing that markets can be coerced into their own upper-middle-class views of proper behaviour. But then, of course, our mothers thought that about us, and look at how difficult, and often defiant, we've grown up to be. Even technicians will admit that the market's own message isn't clear, isn't consistent, isn't perfect - at least not as perfect as the computerists believe the computer can be coerced into being." - The Nature of Risk by Justin Mamis

"The principle of preservation of capital implies that before you consider any potential market involvement, risk should be the prime concern. Only within the context of the potential risk should the potential reward become the determining factor in taking a position. This is the true meaning of risk/reward analysis. Properly applied, it sets the standard for evaluating not only whether to be involved in a trade or investment, but also to what degree. Thus, preservation of capital - 'Don't lose any' - becomes the basis for prudent money management." - Principles of Professional Speculation, by Victor Sperandeo

"Every case will be different, but the rule for getting out holds: what matters is not how close to the final top or bottom we get out - that's mostly luck: what matters, as noted, is that we have a rational formula for getting out which is worked out beforehand. We can set a date: we can use a crawling stop: we can set a price target: we can use a combination of these methods. But deciding the formula beforehand is the thing." - The Way of the Dollar, by John Percival

"That's the problem with amateurs, they only have half a plan, the easy half. They know how much a profit they're willing to take, but they don't have the foggiest idea how much they're willing to lose. They're like a deer in the headlights, they just freeze and wait to get run over. Their plan for a position that goes south is, 'Please God, let me out of this and I'll never do it again,' but that's bullshit, because if by chance the position turns around, they'll soon forget about God. They'll go back to thinking that they're geniuses, and they'll always do it again, which means that they're sure to get caught, and get caught bad." - Pit Bull, by Martin Schwartz

"The market is an imperfect mechanism. Because a disproportionate minority embrace risk as the common denominator of profit, the market pays risk-takers more than they deserve in a mathematical sense. This is because the great majority of non-risk-takers overpay. There is no consistent relationship between the riskiness of an investment and the payoff, but it tends to work in favour of the risk taker." - Source Unknown

"First, I would say that risk management is the most important thing to be well understood. Under trade, under trade, under trade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half. My experience with novice traders is that they trade 3 to 5 times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks." - The Way of the Dollar, by John Percival

"Keep alert, and aggressively monitor you investments. No bull market is permanent, and no bear market is permanent. No stock is a sure thing, and there are no stocks that you can just buy and forget about. The pace of change is great, and investors must expect and react appropriately to it. To act in your own best interests, you must be prepared, informed, and watchful of your investments. Complacency opens the door to surprise and disappointment. You must always be ready to cope with the changes that will confront you." - Spiritual Investments, by Gary Moore

Rules

"You have to learn the rules of the game. And then you have to play better than anyone else."- Albert Einstein

"If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time." - Chinese Proverb

Seeking internal happiness

"There are two kinds of pleasure and suffering. There are physical and mental pleasures and physical and mental suffering. Our materialistic progress is for the sake of achieving that happiness which depends on the body and for getting rid of that suffering which depends on the body. However, it is indeed difficult, isn't it, for us to get rid of all suffering by external means?" - Source Unknown

Self-awareness

"Trading has taught me different things about myself at different times according to how the situation has gone. It has taught me that I can be very disciplined, that I don't have to have external constraints imposed on me. It's taught me that I'm very self-reliant. Often I can put together the jigsaw puzzle, even though some pieces are missing and will have an insight into a trade that other traders don't perceive. Sometimes I realise I've been arrogant in the way I've done something. It's interesting how trading teaches us something about ourselves that we don't necessarily want to know but the information is always very instructive." - The Tao of Trading, by Robert Koppel

"Reasonable people act unreasonably when they are afraid. And people become afraid when they start to lose money, their judgement becomes impaired. This is our human nature in this stage of our evolution. It cannot be denied. It must be understood, particularly in trading the market." - Mass Psychology, by James Dines

"What works in life is often not what works in trading. That is why people who have been successful in other walks of life often fail to become successful traders. The skills they have learnt to achieve success elsewhere will actually often accelerate failure in trading. Great traders have an entirely different viewpoint. There is no hiding place in trading. You have to live with yourself. It is not a question of how, you have to come to terms with yourself. You can't lie to yourself. If you believed you were taught it then you start doubting what you had been taught, whereas if you inherently believe it anyway there is no question of doubting it because it is what you believe anyway." - The Mind of a Trader, by Alpesh B. Patel

"Too many people promise to 'do the best that they can,' without realizing that 'the best you can' is limited by your concept of best. I'm suggesting that you decide on a number that's a real stretch and then trade in terms of that number. The number you choose is only limited by your imagination. Instead of waiting to get the conviction, you start to play at the level that you've chosen and get the conviction afterward . . . The standard way we all function is to do what we know and produce the familiar result because that's comfortable, but to commit to something beyond that is scary as hell. We're all trained to cut down on the pain by doing what's reasonable. That's the most secure place to be, but it's not necessarily the best place to be. The comfortable number, whatever it is, is not tapping your potential or stretching you." -Trading to Win, by Ari Kiev, M.D.

"I think trading has taught me a lot about myself. As a matter of fact, I think the whole process, if you allow yourself to really be open, is like going through psychotherapy every day. It really gives you an opportunity to see what you're all about. The market forces you, if you're going to succeed, to be completely honest with yourself. If you're losing money, you are simply forced to confront that reality. It's an objective reality, it's right in front of you, and you have to acknowledge it. Truthfully, I believe the market weeds out people who are unable to be honest with themselves. I suspect that trading, aside from being a fascinating way to make a living, is also one of the most self-revelatory things that a person can do. Day in and day out you're confronted with all your primal emotions." - The Tao of Trading, by Robert Koppel

"For the past 17 years I've had a friend whose wife is fat. She is an elegant dresser, and she has been on a diet for as long as I have known her. She says she wants to lose weight and she does not eat cake or potatoes in front of people - but when I come into her kitchen, I often see her go at it with a big fork. She says she wants to be slim, but remains as fat today as the day we met. Why? The short-term pleasure of eating is h2er for her than the delayed pleasure and health benefits of weight loss. My friend's wife reminds me of a great many traders who say they want to be successful but keep making impulsive trades - going for the short-term thrills of gambling in the markets. People deceive themselves and play games with themselves. Lying to others is bad enough, but lying to yourself is hopeless. Bookstores are full of good books on dieting, but the world is full of overweight people." - Trading for a Living, by Alexander Elder

"Carlos Casteneda, in his book The Teachings of Don Juan: A Yaqui Way of Knowledge, outlines Don Juan's description of the four enemies one must overcome to become a 'man of knowledge,' or in this case a wise investor. The first enemy is fear. If a man runs away out of fear and avoids investing, nothing will happen except that he will never learn. Fear is overcome by clarity, which then becomes an investor's second enemy. Clarity of mind about the investment process, which is hard to obtain, dispels fears, but it also blinds. If you yield to this power, which is only a point before your eyes, you have succumbed to your second enemy. Remember, in analysis what can get you into trouble is not what you took into account, but rather the variables you never questioned. You must see your clarity and use it only to see, and wait patiently and measure carefully before taking the next step. One who overcomes clarity possesses power, but this too is an enemy. One who is defeated by this third enemy, power, dies without really knowing how to handle it. To conquer power, you have to defy it deliberately. You must keep everything in check and know how to use your power. For Lao Tsu, power means understanding 'the way of the universe.' If you do not possess such understanding, power can come and go. If you have such power, it should be used only when it feels right and not viewed as anointing you as the 'investor for all seasons.'" - The Tao Jones Averages, by Bennett W. Goodspeed

"People hide things from themselves. Psychologists call it repression or denial. Forgetting or simply not seeing are ways of avoiding discomfort...The problem is that sometimes thinking of something unpleasant does serve a useful purpose...In your trading, there is no room for repression or denial. It is the one area of your life where only reality, in the purist form possible, will suffice." - Trader's Manifesto, by Donald Worden

"One sure way to identify a true gambler is to see whether or not he is secretly upset by the assertion that, 'It's not what you win, it's what you keep.' True gamblers know that they will not keep anything, because they secretly intend to lose. Studies show that gamblers consistently overestimate their own skill, luck, and low probabilities; also their tendency to overestimate chances to win is more likely where there is a need for achievement. Furthermore, positive events are learned more rapidly and forgotten more slowly than negative events, so gamblers think that they are ahead because they remember the big-winning decision, and they downplay the more-numerous losses. Gambling is a classic example of 'intermittent reinforcement,' or partial reward, and psychological evidence is overwhelming that such people are peculiarly resistant to ending this situation. If a gambler always won, or always lost, he would lose interest, and it is precisely the conflict between fear and greed that helps keep the gambler in the game. Ironically, studies also show that even mathematically sophisticated gamblers, with full information of odds and probabilities, choose poor risks most of the time." - Mass Psychology, by James Dines

"Ultimately, your trading performance and your life are nothing but a mirror of your consistent thoughts and beliefs, reflections of your values and your character. While strategies, rules, and selection methodologies are important components of trading/investing success, they are just a first giant step toward investment success. Perhaps even more important is the process you develop for systematically evaluating your success and mistakes in order to learn, grow, and improve your trading and self." - The Hedge Fund Edge, by Mark Boucher

"The truth is that most individual investor's follow no investing plan and are very much prey to their emotions. Buy decisions are often made impulsively, and sell decisions are frequently made out of superstition, fear, anxiety, guilt, and masochism. A very common example of this is the investor who does just the opposite of Wall Street's maxim: Cut your losses, let your winners run. My research shows that investors who violate this maxim tend to have many obsessive personality traits. Obsessive people have a tendency to become so anxious when they own a stock rising in price that they impulsively sell at the first weakness, often rationalizing, 'You never go broke taking a profit.' On the other hand, when such an obsessive person owns a stock dropping in price, they keep saying to themselves, 'When it gets back to what I paid for it, I will sell it." - The Psychology of Investing, edited by Lifson and Geist

"There is a good measure of self-knowledge required to choose the proper investment course. It has even been postulated that many small investors in the stock market, without knowing it, secretly want to lose. They jump in with high hopes - but feeling vaguely guilty. Guilty over 'gambling' with the family's money, guilty over trying to get 'something for nothing,' or guilty over plunging in without really having done much research or analysis. Then they punish themselves, for these or other sins, by selling out, demoralized, at a loss." - The Only Investment Guide You'll Ever Need, by Andrew Tobias

"A thorough understanding of yourself is essential in trading. How you think, what you believe, and how you act out your life are critical parts of winning in trading and winning in life. Very few people understand, or are aware of, this subtlety in the trading profession. In other careers, you can get by; but in trading, you are quickly eliminated. The sad part is, most people have no idea why they have failed." - Principles of Professional Speculation, by Victor Sperandeo

"When a trader makes a profit, he gives himself credit and feels that his judgment is good and that he did it all himself. When he makes losses, he takes a different attitude and seldom ever blames himself or tries to find the cause with himself for the losses. He finds excuses; reasons with himself that the unexpected happened, and that if he had not listened to someone else's advice, he would have made a profit. He finds a lot of ifs, ands, and buts, which he imagines were no fault of his. This is why he makes mistakes and loses the second time. The investor and trader must work out his own salvation and blame himself and no one else for his losses, for unless he does, he will never be able to correct his weaknesses. After all, it is your own acts that cause you losses, because you did the buying and the selling. You must look for the trouble within and correct it. Then you will make a success, and not before." - The Investor's Quotient, by Jacob Bernstein

"The trouble with self-fulfilment is that many people have a self-destructive streak. Accident-prone drivers keep destroying their cars, and self-destructive traders keep destroying their accounts. Markets offer unlimited opportunities for self-sabotage, as well as for self-fulfilment. Acting out your internal conflicts in the marketplace is a very expensive proposition. Traders who are not at peace with themselves often try to fulfil their contradictory wishes in the market. If you do not know where you are going, you will wind up somewhere you never wanted to be." - Trading for a Living, by Alexander Elder

"Emotions get in the way of making good investment decisions. For example, your desire to feel good about yourself - seeking pride - causes you to sell your winners too soon. Trying to avoid regret causes you to hold your losers too long. The consequences are that you sell the stocks that perform well and keep the stocks that perform poorly. This hurts your return and causes you to pay higher taxes." - Investment Madness, by John R. Nofsinger

"You can't kid yourself in trading. You have to deal with who you really are, and take responsibility for all your shortcomings, which the markets have a way of revealing rather starkly. You have to confront all your fears and tame them. You have to check your ego at the door. You learn from each experience. There's nothing in life that you can do that can guarantee that you're not going to go through some pain. Trading is certainly not a singular pursuit in that regard. What I have learned is this: Patience and diligence are rewarded. Profits will eventually accrue if you do the right thing and stick with it. That's the most important thing!" - The Tao of Trading, by Robert Koppel

Self-esteem - the foundation for trading success

"Successful traders have high self-esteem when it comes to their trading. They are confident that their trading decisions are correct. They are confident that they have interpreted indicators or signals correctly and they are ready to act quickly on their analysis. When they make a decision, they don't second-guess themselves or doubt that they have made the right decision. They just stick with their method and follow through, and accept the consequences, good or bad. That isn't to say that they don't have their share of setbacks and disappointments. On the contrary, they have probably faced more setbacks in trading than unsuccessful traders. The key difference is that they did not let these setbacks disappoint them. They picked themselves up, moved forward, learned from their mistakes, and went on to become successful traders. Developing high trading self-esteem is the foundation for trading success. By knowing where you stand on this trait, and raising your trading self-esteem if you need to, you can improve your trading performance." - Source Unknown

Simplicity

"Our life is frittered away by detail. Simplicity, simplicity, simplicity!" - Henry David Thoreau

Stress management

"It is crucial to maintain a good attitude, so it is important to approach investing with positive thinking. Don't be glum. Avoid foolish thoughts. Learn from every experience. Do what you are supposed to do. No door closes that doesn't open another. If you have your health, you still have everything - without health, you have nothing. Tomorrow is another day. We live and learn. Life goes on - this is the way it is and therefore is supposed to be. Investing results are no reflection on your manhood, or your womanhood. We have ups and downs, and we will prevail. We have defeats yet are never defeated. There are no guarantees. If you don't have any other options, you don't have a problem, so don't worry about what you can't affect; the challenge is to understand when there are no other options, and to stop chasing what does not work. When you hear bad news yet can't change it, don't worry about it; the world was made that way and it will remain so long after we're gone. Let things be." - Mass Psychology, by James Dines

"There are several concrete things you can do to grasp what part your emotions play in your trading success or failure. For instance, keep a journal of your feelings so that you can track your emotions and more easily see our progress or setbacks. By having this detailed written information, you can visually follow your progress, and your notes will help you more readily find solutions to your problems. Another way to help manage your emotions is to share your feelings with others. By discussing your feelings about trading, you can hear, out loud, what you are really thinking and how it impinges upon or enhances your trading. Listening to others may bring to light similar underlying beliefs you may be fostering." - Trading to Win, by Ari Kiev, M.D.

"What I eventually learned was, don't trade too heavily the month before and two months after your wife gives birth. While her hormones are changing, yours are just trying to keep up. If you're a good husband, you're not staying home at night working on your charts and figuring out your ratios. For the month before the birth, you're going to Lamaze class working on how to breathe, how to rub your wife's back. For the two months after the birth, the baby takes centre stage and your whole routine is thrown out of whack. You're not getting anything done. You're up two, three, four times a night. You're trying to figure out if you have the disposable diaper right side up or upside down. You're always tired, you lose your concentration."- Pit Bull, by Martin Schwartz

"You may need to invoke self-control management techniques, such as making rules of thumb and controlling your investment environment. These techniques can help you avoid the mistakes caused by letting your emotions and psychological biases influence your investment decisions. However, you should also understand why the rules exist and be able to bend them if creative thinking allows you to increase your wealth." - Investment Madness, by John R. Nofsinger

"Overcoming the propensity to play emotionally requires a conscious commitment to specific trading objectives. This entails choosing a target, developing a strategy, and finding a method for adhering to it. A goal enables you to keep a relatively even keel through good and bad periods, to sustain momentum, and to keep from becoming bored." - Trading to Win, by Ari Kiev, M.D.

"For me, knowing how to take a loss is probably the most important ingredient for a successful trader, especially a short-term trader. We have to embrace risk every day. If you don't know how to manage the difference between your ego and taking a loss, you've got a big problem. Managing expectations is the difference in this business between succeeding and failing. I learned a long time ago not to let my own personal issues of self-worth or approval have anything to do with it. It's a business like any other." - The Best: Conversations with Top Traders, by Marder and Dupee

"Anxiety" is a Low State, and results from spending too much time in the future, excessive worry that is secretly enjoyed. 'Taking One Day at a Time' is a High State; spending too much time in the future is punished by 'Anxiety' while getting stuck in the past is punished by

"Regrets". Indeed, dwelling in the past is punished by happiness having been merely a memory rather than having been experienced. The market is not concerned with what happened to you in your past investments. The solution is to undertake your study of the future in a rapid and business-like fashion, and then promptly move back to the present: take one day at a time, and lighten up. Buy your stock, set your stop, learn from it, and then love what you get because that's the hand you had life deal to you - and it's all you're getting. Mickey Mantle once asked Yogi Berra what time it was, and Yogi replied, 'You mean right now?' There are few States higher than 'Taking One Day at a Time!'; after all, today is the tomorrow you worried about yesterday, and you're still here." - Mass Psychology, by James Dines

"You need to be able to read your mental and physical stress cues and interpret them correctly. Notice if your arousal level is too high. You can then intervene early, before the stress becomes too unmanageable. You can learn to take deep breaths, do some positive self-statements, and relax enough to problem solve and re-adjust appropriately to the situation." - Your Performing Edge, byJoAnn Dahlkoetter, Ph.D.

"You need to be able to read your mental and physical stress cues and interpret them correctly. Notice if your arousal level is too high. You can then intervene early, before the stress becomes too unmanageable. You can learn to take deep breaths, do some positive self-statements, and relax enough to problem solve and re-adjust appropriately to the situation." - Your Performing Edge, byJoAnn Dahlkoetter, Ph.D.

"In times of greatest economic stress, the worst thing you can do as an investor is to panic. Reactions to situations that are born of fear are rarely wise or helpful. Perhaps you didn't sell before everyone else began to, and you're in a market slump. There you are, facing a huge loss, all in one day. Your first instinct may very well be to call your broker and sell as quickly as you can. This is a classic panic reaction. Don't allow yourself to give into that initial panic attack; don't rush to sell the next day. The time to sell is before the crash, not after. Instead, take a deep breath, and study your portfolio. If you didn't own these stocks now, would you buy them after the market crash? Chances are that you would; they'd be even cheaper. Selling them wouldn't be a correction, but a reaction." - Spiritual Investments by Gary Moore

"There is one very big psychological distinction between the positions of shareholders and CEO, which is one of control. When times go bad, as they did for FedEx, AOL, and any other growing company you could think of, people within the company can at least do something about it. The poor shareholder can no more make things better that an airline passenger can eliminate clear-air turbulence. It's no wonder that the mood at investment institutions is often far less self-assured than the mood of the company itself. It's no wonder that control freak investors are among the first to bail out in times of crisis." - The Inner Game of Investing, by Derrick Niederman

"Let us not look back in anger or forward in fear, but around in awareness."- James Thurber

"Of paramount importance to the trader, though, is fear. I am convinced that it is absolutely necessary to 'run scared.' Only an exaggerated emotion can generate the concentration necessary to survive as a trader. Speculating is a stress business. In sports we see constant demonstrations of performing under stress... It is the ability to thrive under stress that sets the superstars apart. An effective trader handles stress like an animal. His natural instinct of self-preservation emerges like that of a beast in the jungle when challenged. His behaviour is reduced to pure, unsublimated, utterly animal-like selfishness. He claws for what is his or what he wants to be his in the most greedy fashion. He flees from danger in the most cowardly fashion. He functions like a rat caught in a corner. There is no consideration of pride or style or personal grace or honour or bravery. Survive somehow. Win somehow. As a speculator, you must get in touch with your baser instincts and learn to accept yourself in that way. At the end of the day, Dr. Jekyl, go home, complement your wife, play with your kids, give something to charity, listen to Beethoven, write poetry." - Trader's Manifesto, by Donald Worden

"When we notice the impulse to trade based on h2 fear, it is usually best to literally step out of the trap by stepping out of the situation. We need to get up, walk away from the computer and television, take a walk, get a diet soda, go outside and water the plants, or do anything else that will move us out of the fear/panic mode. Don't return to the computer until you have managed to achieve some emotional control over your fear/panic reaction. If you can't get a grip on your fear, then don't come back that day. Most likely you will find that even if you keep thinking about the miserable market conditions while you water the planters, simply getting away from the keyboard and monitor is enough to make a difference. It removes the demand to take action and gives you the mental space to gain perspective and let go of your knee jerk sell reaction." - The Disciplined Online Investor, by Steven Hendlin, Ph.D.

"Of course most investors enjoy the process of amassing profits, the satisfaction of adept trading, or simply outwitting the crowd. But it is not just the outcome that is important, it is also the process. The tension that accompanies being in the market is an integral part of the overall experience. For profit without risk, or loss without care drains much of the pleasure out of the investing process." - The Mind of the Markets, by F. J. Chu

"When we notice the impulse to trade based on h2 fear, it is usually best to literally step out of the trap by stepping out of the situation. We need to get up, walk away from the computer and television, take a walk, get a diet soda, go outside and water the plants, or do anything else that will move us out of the fear/panic mode. Don't return to the computer until you have managed to achieve some emotional control over your fear/panic reaction. If you can't get a grip on your fear, then don't come back that day. Most likely you will find that even if you keep thinking about the miserable market conditions while you water the planters, simply getting away from the keyboard and monitor is enough to make a difference. It removes the demand to take action and gives you the mental space to gain perspective and let go of your knee jerk sell reaction." - The Disciplined Online Investor, by Steven Hendlin, Ph.D.

"In times of greatest economic stress, the worst thing you can do as an investor is to panic. Reactions to situations that are born of fear are rarely wise or helpful. Perhaps you didn't sell before everyone else began to, and you're in a market slump. There you are, facing a huge loss, all in one day. Your first instinct may very well be to call your broker and sell as quickly as you can. This is a classic panic reaction. Don't allow yourself to give into that initial panic attack; don't rush to sell the next day. The time to sell is before the crash, not after. Instead, take a deep breath, and study your portfolio. If you didn't own these stocks now, would you buy them after the market crash? Chances are that you would; they'd be even cheaper. Selling them wouldn't be a correction, but a reaction." - Spiritual Investments by Gary Moore

Stress producing events

"Successful trading requires the management of your stress response, which is triggered when you believe you may not be able to cope with a perceived or real threat to your mental, physical, or emotional well-being. It's vital to keep monitoring your stress levels and make sure they are low. One approach is to count up the number of life events that have produced stress in the past six months. How stressful has your life been in the past six months? Have you experienced several major life transitions? Successful coping therefore requires awareness of all potential sources of stress, so we can allocate our coping resources most economically." - Source Unknown

Success

"Success is getting what you want. Happiness is wanting what you get." - Dale Carnegie

Track records

"Be sceptical of track records. There are so many funds and forecasts that at any point in time, someone has to have been right. With enough monkeys in the room, one of them will type out Hamlet. But it doesn't mean the same monkey will then go on to write Macbeth."- Paul Ormerod

Trading

"Before you enter any trade, think that you will have to explain this trade to the world in a case study format. Trade as if the world was standing behind your shoulders." - The Stock Trader, by Tony Oz

"Achieve success in any area of life by identifying the optimum strategies and repeating them until they become habits." - Charles Givens

A traders' qualities

"I hate weekends because there is no stock market."- Rene Rivkin

"The people that I know who are the most successful at trading are passionate about it. They fulfil what I think is the first requirement: developing intuitions about something they care about deeply, in this case trading. They are the people who study years of charts, or commodity annuals…. They develop a deep knowledge of whatever form of analysis they use. Out of that passion and knowledge, their trading ideas, insights, and intuitions emerge." - Charles Faulkner

"The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will." - Vince Lombardi

"The class of those who have the ability to think their own thoughts is separated by an unbridgeable gulf from the class of those who cannot."- Ludwig von Mises

"Most of the Ivy League guys I know are used to being right, they get very uncomfortable dealing with uncertainty — when there is no right answer. Their egos often make them so afraid of being wrong, that they're unable to make good bets. They aren't comfortable with the idea of risk, because they don't know how to assess it or measure it. They have been taught to absorb knowledge, not what to do with it."- Larry Hite

"It is impossible for a man to learn what he thinks he already knows." - Epictetus

"It isn't that they can't see the solution. It is that they can't see the problem." - GK Chesterton

"I want to be able to explain my mistakes. This means I do only the things I completely understand." - Warren Buffett

"It always amazes me how few investors — and sometimes, fund managers — can articulate their investment philosophy. Without an investing framework, a way of thinking about the world, you're going to have a very tough time doing well in the market. If you do your homework, stay patient, and insulate yourself from popular opinion, you're likely to do well. It's when you get frustrated, move outside your circle of competence, and start deviating from your personal investment philosophy that you're likely to get into trouble."- Pat Dorsey

"Some people seem to like to lose, so they win by losing money."- Ed Seykota

"We know of traders whose public image looks pristine, but their personal lives, mental health and balance are in such dire strai ts — they are not capable of any type of real success or achievement. They might get the numbers but their problematic mental health keeps them back. Bottom line — they never get to where they want to go. Life becomes one big rationalisation (or excuses) for them."- Michael Covel

"I was lucky to have the right heroes. Tell me who your heroes are and I'll tell you how you'll turn out. The qualities of those you admire are the traits you, with a little practice, can make your own, and that if practised will become habit-forming."- Warren Buffett

Trading competitively

"Trading is a competitive game, but remember whom you are competing against - yourself." - The Trading Athlete, by Shane Murphy and Doug Hirschhorn

Traders versus bookies

"There will be cheating in any activity involving big money, but compared with the stock market, horse racing is honest and well-regulated. If you added up the dollar total of all the larceny in the history of horse racing, it would be a tiny fraction of the money defrauded from the public in the Enron scandal alone." - Andy Beyer [Thington Post]

"As a bookie I learnt … how people behave, how they judge winning versus losing, the need for hope. Most people do not understand the nature of odds, how some things are multiplicative in nature as an additive. I mean, for example, if you had to decide on a company and … there were 15 different aspects of that company that you had to think about and you could be 95% correct on every one of those aspects, you still have about a 50/50 chance, probably less than 50, probably 45% chance. So I learned about odds. I learned about people and their hopes and dreams and drudgery of work and the perverse psychology that makes people make stupid decisions. I was lucky in that I learned at a young age, but it was time to move on; when I went back to high school, it was sad because it took about 15 years for me to get back to what I was making when I was about 15 years old." - Bruce Berkowitz, founder of the Fairholme Fund.

"Horse handicappers fall into two major categories: speed and class. The speed dopester wants lots of figures: He pores over the form sheet to determine which horse posted the fastest time in recent races, adjusted for track conditions, weight carried, etc. The class handicapper scorns numbers. "Tell me about bloodlines and the quality of past opposition," he says. These differing doctrines have their parallel in the investment world, between analysts emphasising quantitative factors and those who favour a qualitative approach. The quantitative analyst says, "Let's buy the cheapest stock as measured by some combination of price: earnings ratio, book value, yield, etc. The qualitative analyst says, "Buy the best company, the best management and don't worry too much about the numbers. Happily, there's more than one way to get to financial heaven. Skilled and insightful practitioners of either persuasion will be rewarded." - Warren Buffett, Berkshire Hathaway.

"This (web)site is dedicated to teaching punters how to increase their odds substantially by betting on horses that are expected to come in last. This strategy works much like shorting stocks …. Wouldn't it be nice to place a bet-to-lose wager on a horse that is not expected to come in first, and win nearly the same amount of prize money as the winning horse?" BookMakersSecrets.com.

"Sports betting and financial markets are both efficient enough that you have to do your homework, and lots of it … it's not a crime to have more information than the guy on the other side of the bet/trade … it's just that if Goldman is your bookmaker, don't be surprised if you end up losing." - Felix Salmon, Reuters.

Trends

"Trends test the point of last support/resistance. Enter here even if it hurts." - Alan Farley

Two rules

"Two rules: 1. Preserve the principal 2. When in doubt, see Rule #1." - Warren Buffett

Uncertainty

"The world is not growing worse and it is not growing better--it is just turning around as usual."- Finley Peter Dunne

"One of the greatest dangers that traders face is uncertainty about the approach they are taking, and whether or not it's going to continue working. I find, invariably, that just when people write something off is the exact wrong time to stop using it." -Curtis Faith

"A timid question will always receive a confident answer."- Lord Darling

"My heroes are the ones who survived doing it wrong, who made mistakes, but recovered from them."- Bono

"Sit next to a pretty girl for an hour, it seems like a minute. Sit on a red-hot stove for a minute, it seems like an hour. That's relativity."- Albert Einstein

"Consider the postage stamp, my son. It secures success through its ability to stick to one thing till it gets there." - Josh Billings

"If you're playing a poker game and you look around the table and can't tell who the sucker is, it's you." - Paul Newman

"It is sad to grow old but nice to ripen."- Brigitte Bardot

"Seek not greatness, but seek truth and you will find both." - Horace Mann

"You can measure a man's character by the choices he makes under pressure." - Winston Churchill

"I don't psyche myself up. I psyche myself down. I think clearer when I'm not psyched up."- Steve Cauthen

"You grow up the first day you have your first good laugh at yourself." - Ethel Barrymore

Work

"I never remember feeling tired by work, though idleness exhausts me completely" - Sherlock Holmes

Worry

"Remember, today is the tomorrow you worried about yesterday." - Dale Carnegie.

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