Quotes from professional traders, investors and other famous people are not always just cheesy sayings — they can be quite useful and carry a lot of meaning in them. Quotes can inspire, guide and provide food for thought. They may become the backbone to a trading approach and help form a trading philosophy. In reality, quotes are just small nuggets of wisdom that are readily available, some of them can pretty much sum up entire books about trading. Don’t get us wrong — reading books is important and beneficial. But sometimes all you need is a quick pick-me-up. Read the following quotes that may help gain a new perspective.
“If you can’t explain it simply, you don’t understand it well enough”
— Albert Einstein
This brilliant quote could become the golden standard for your learning process in trading. When you are studying technical analysis, learning about fundamental market factors or trying to master a new indicator, always try to retell what you’ve just learned. Any information can be rephrased into a simple explanation, just imagine that you are explaining it to a kid. If you can’t explain it in a couple sentences, then it is likely that you didn’t quite understand it and that you need to study the matter a bit more in depth.
“In trading/investing, it’s not about how much you make but rather how much you don’t lose”
— Bernard Baruch
A simple truth that goes hand in hand with every risk management technique. Protecting the capital should be the first priority of every trader, since saving may be easier than losing everything and trying to regain it. You may consider remembering this quote next time you’re driven by emotions and try to focus and retain composure.
“It’s not whether you’re right or wrong that’s important, it’s how much money you make when you’re right and how much you lose when you’re wrong.”
— George Soros
Everyone makes mistakes, but some are more costly than others. Evaluating risk and the potential outcomes is crucial, especially in trading where real money is at stake. For instance, one of the ways to possibly manage losses and risks in case of a wrong prediction, is the 2% rule of investing.
“There is a time to go long, a time to go short and a time to go fishing.”
— Jesse Livermore
Jesse Livermore loved fishing: it was a big passion of his, and he even caught a 436-pound swordfish once. Perhaps, had he followed his own advice and gone fishing more often, he may have avoided some of the trading mistakes and failures during his life. However, the general idea is really important: taking time off and not putting so much pressure on trading might have a positive influence not only on one’s trading results, but also their mental health.
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
— Warren Buffett
Trading is not about intelligence, as Warren Buffett mentions in his quote. Even the smartest trader will lose if they are lacking discipline, control over their emotions and consistency. The qualities that pay off in trading can be obtained through practice, the famous billionaire claims, and there is truth in it.
Which is your favorite trading wisdom? Share it in the comments below!
