Trading Wisdom and Quotes

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While retail forex trading is a relatively new phenomenon, on the institutional level it has been around for many years. Furthermore, there are similarities between all financial markets, so those that have been traders for a long time have developed their own wisdom. Much of this wisdom is contained in some inspiring quotes. Some of this advice may seem like common sense, but letting it really sink in can offer newer traders a moment of truth that can bring about a profound improvement in the way they view the market, and as a result, in the way they trade.

"The trend is your friend" - perhaps the best known trading adage of all time, it is meant to remind traders to always identify the prevailing trend, and never to trade against it, but rather wait for retracements and then enter trades in the direction of the trend.

"The market can stay irrational longer than you can stay solvent" - The way the market reacts to certain news or events may not seem rational at times, but there is no sense in trying to fight the market - it moves where it moves and does not care one bit about your opinion.

"A fool and his money are soon parted" - If you are not smart about where you put your money, you will most likely lose it.

"The trading rules I live by are: (a) Cut losses, (b) Ride Winners, (c) Keep bets small, (d) Follow the rules without question, and (e) Know when to break the rules." - Rules are important, but following them blindly does not necessarily lead to success. Know which conditions produced those rules in the first place, so that when the conditions change, the rules can too.

"Amateurs Focus On Rewards. Professionals Focus on Risk." - Experienced traders think first about how much they can lose on a trade, base their calculations on that, and then see if they are happy with the potential reward the trade offers. Novices usually do the opposite, blinded by the allure of quick riches.