What is the most important thing in trading?
Let's listen to how nine top traders in the world answered!
1. Marty Schwartz: Money Management
The champion trader, in the first ten years of trading, often lost money and was on the verge of bankruptcy for a long time. After 1979, he became a top trader. He has participated in the four-month trading competition project in the National Investment Competition 10 times in total, and won 9 championships, with an average return on investment of 210%. The money he earned is almost the sum of other participants.
If I'm wrong, I have to get out quickly. There is a way to keep the green hills, and I'm not afraid of running out of firewood. I have to keep my strength and come back.
Whenever you suffer a setback, you will feel very uncomfortable. Most traders always hope to get back immediately when they suffer a major loss, so they get bigger and bigger, trying to recover the disadvantage in one fell swoop. to fail. After I suffered that blow, I would immediately reduce my business. What I did at that time was not about how much money I made to make up for the loss, but about regaining my confidence in trading.
When anyone is engaged in trading, he will experience a period of continuous profit. For example, I can make profits for 12 consecutive days, but in the end I will definitely feel very tired, so I will reduce the amount of business immediately after continuous profits or major profits . Losses are usually caused by taking profits and not closing them.
2. Michael Marcus: Patience
Genius traders, between 1969 and 1973, often lost all their money, in a borrow, lose, borrow, lose formula. After 1973, the road to successful trading began. In August 1974, he joined a commodity company as a trader. The company gave him US$30,000 as a trading fund. About ten years later, the rate of return of this fund was about 2,500 times, expanding to US$80 million.
The main reason why I keep losing money and losing everything is that I am not patient enough, so that I ignore the trading principles, and I can't wait for the general trend to be clear before rushing into the market.
Today, there are fewer and fewer trading opportunities that meet the profit-making principle, so you have to wait patiently. Whenever the market trend is completely opposite to my prediction, I will say: I originally hoped to take advantage of this wave of market trends to make a lot of money, but unexpectedly the market The trend is not as expected, so I just quit.
You must stick to the good cards in your hand and reduce the bad cards in your hand. If you can't stick to the good cards in your hand, how can you make up for the losses caused by the bad cards? There are a lot of really good traders who end up spitting out all the money they make because they don't want to stop trading when they lose money. When I lose money, I say to myself: You can't continue trading anymore. Wait for more clarity. And when you get a good card, you have to hold it patiently, otherwise you will definitely not be able to make up for the money you lost when you got a bad card.
3. Tom Baldwin: The most important thing is patience
The most common mistake many traders make is to trade too often. They don't choose the right time to trade carefully. When they see market fluctuations, they want to enter the market. This is tantamount to forcing themselves to engage in transactions, instead of waiting patiently for good trading opportunities in an active position.
The reason we are able to make money is because we have patiently done a lot of work before entering the market. Once many people make a profit, they will take the transaction lightly and start to operate frequently. The next few losses will make them unable to cope with it, resulting in huge losses, and even losing their old capital.
4. Bruce Covanner: Risk Control
Forex traders across the world. From 1978 to 1988, the average annual return rate was 87%. That is to say, if you invest 2,000 US dollars in his fund at the beginning, your investment can grow to 2 million US dollars in 10 years.
Whenever I enter a trade, there is always a pre-set stop loss point, which is the only way I can sleep peacefully. I always avoid setting a stop loss at a price that the market cannot easily reach. If your analysis is correct, the market will never pull back to the stop loss price. If the market reaches the stop loss point, it means that the transaction has made a mistake.
One of my worst trades was impulsive. According to my trading experience, the most destructive mistake in trading is being too impulsive. Anyone who makes a trade should proceed according to the established trading signal, and never change the trading strategy hastily because of impulsiveness. Therefore, not to be impulsive is the first thing in risk control.
I want to emphasize that you must learn to control risks when you are engaged in trading, and you have to prepare for the worst. Therefore, you must operate in small quantities and control the loss of each transaction within 1%-2% of your funds.
5. Richard Dennis: Calm
Richard Dennis, a legend in commodities trading. Entered the commodity trading industry in the late 1960s, and often lost money in the first few years. After 1970, he started on the road to success. In 20 years, he turned $400 into a fortune of about $200 million.
I've been trading for over 20 years and if I hadn't learned to be calm, I would have been driven crazy by the ups and downs of my trading career. A trader is like a boxer. The market will give you a hard blow at any time, and you must remain calm. When you lose money, it means that the situation is not good for you. Don’t worry, take your time. You must minimize the loss and protect your capital as much as possible. When you suffer a heavy loss, your emotions will be greatly affected. You must Decrement operation, and consider the next transaction after a period of time.
No matter if I lose a lot or make a lot of money, I will keep my peace of mind and insist on analyzing every transaction every day to see if there are any violations. For good transactions, I should think carefully about why they are successful, and for bad transactions, I must be self-sufficient. Review and find out the crux of the problem. Therefore, if you want to do well all the time, you must pay close attention to every transaction you make.
Almost everyone can list 80% of the trading rules we teach, but they can't tell people how to strengthen these rules when the market is unstable. Most quotes.
6. Marco Weinstein: Always Be Cautious
Marco Weinstein, the all-time trader. I used to work as a real estate agency, and later became a trader. In the first four years, losing money is like losing money. After more than 4 years of failure experience, he started to move towards success and has maintained a very high rate of profit. A person familiar with the matter revealed that he had watched his 100 transaction records, and only a few of them were losses.
Why am I able to achieve such a high rate of profitability? That's because I'm afraid of the treacherous and changeable market. I found that successful traders are usually people who are afraid of the market. The fear of market trading makes me choose the timing of entering the market carefully. Most people don't wait until the market is clear to get in. They always go into the woods in the dark, and I always wait until daylight to get in. I will not predict the direction of the market change before the market starts. I always let the market change tell me the direction of the market change. Choosing and waiting for the perfect opportunity to attack, otherwise I have to give up. This is my most important trading principle.
Don't be dazzled by the joy of making profits. You must know that the most difficult thing in the world is how to make profits continuously. Once you make money, you will hope to continue to make more money. In this way, you will forget If you don’t take risks, you will not doubt the correctness of your established trading principles, which is the reason for self-destruction. Therefore, you must be cautious at all times, be very cautious when you lose money, and be more cautious when you make money.
Trading strategies must be flexible to respond to changes in the market in order to show your highly cautious combat style. The most common mistake most traders make is that their trading strategy is always the same. They often say, "Why the hell is the market completely different from what I thought?" Why should it be the same? Isn't life always full of unknowns? When your important stop loss point is broken by the market, it is most likely that the market has fluctuated or the trend has changed. How can you continue to operate on this trend at this time? Therefore, at this time you must be very cautious and wait for things to become clearer, rather than continue to operate rashly.
7. Paul Tudor Jones: Self-Discipline and Money Management
In September 1984, Jones founded the Tudor Futures Fund with US$1.5 million. By October 1988, the fund had grown to US$330 million. He has a dual personality. In social situations, he is quite easy-going, an approachable, humble and polite gentleman, and when he is in business, he gives orders as if he were a fierce and brutal chief.
When I lost 70% of my funds at one time, I decided to learn self-discipline and fund management. When operating, I will try to relax as much as possible. If holding a position is not good for me, I will go out, and if it is good for me, I will hold long. My current psychology is how to reduce losses, not how to make more money. Therefore, when your trading situation is not good, reduce or stop the operation, and when the trading is in a good situation, increase the operation, and never enter the market rashly when the situation is beyond your control.
Whenever I make a deal, I'm always on edge, because I know that in this business, success comes and goes quickly, and every time I get hit, it's always when I'm complacent. Everything is destroyed faster than it took to build it. Some things take ten years to build, but can be completely destroyed in a day. Therefore, no matter when, I will strictly restrain myself.
My biggest shortcoming is that I am too optimistic, so when I operate now, I never think about how much money each transaction can make me, but I always think about the possible losses, and always pay attention to protecting what I already have.
8. Eddie Seykota: Willing to Change Himself
A genius trader, Seykota used the computer trading system to operate for clients and himself. From 1972 to 1988, the return on investment he obtained was almost unbelievable. For example, one of his clients invested $5,000, and by 1988 In 2009, the funding grew to $12.5 million.
I think trading and psychology are actually two sides of the same coin. Financial markets are a great place to test one's psychological barriers. What happens to you must be a reflection of your own state of mind. It is very difficult for a failed trader to turn himself into a successful trader because they simply do not want to change themselves. Every loser actually has a subconscious desire to lose in his heart. Therefore, even if he succeeds, he will unconsciously destroy the fruits of victory. Everyone can get what they want in the market.
When trading, you must take the initiative to be yourself according to the defects of human nature. For example, when I am not lucky in the operation, I will continue to reduce the operation or even stop the operation in the face of losses, instead of increasing the trading life emotionally. I hope To restore the decline, because this will definitely cause heavy losses, it is simply self-inflicted, and it is impossible to live.
Most people have a gambler mentality when trading, and they like to fight in and out of heavy positions. Therefore, you must change yourself in this aspect. Throughout the ages, none of the guys who operate with heavy positions are invincible. You must control each of your losses within 5%, of course, within 2% is the best. Trading according to charts is like surfing. You don't need to know the reason why the waves rise and fall. As long as you can feel the rhythm of the waves and grasp the timing of the waves, you can become a master surfer.
9. Larry Hite: Follow the trading system and risk control
Hight founded Mingde Investment Management Company. According to statistics, the company's annual return on investment is always between 13% and 60%. In April 1981, the company's capital was only 2 million US dollars, and it reached Years, it has grown to $800 million. The biggest feature of the company is not to obtain the maximum return on investment, but to maintain the continuous and stable growth of return on investment through strict risk control.
Some people will change the trading system when they lose money, while some people don't believe in the trading system at all, doubt the instructions issued by the trading system, so that they often enter and exit the market according to their own preferences, but I always follow the trading system. Trading for the thrill, not for the win, may be rather boring, but it's quite effective. When I meet up with other traders and they talk about their thrilling trading experiences, I'm always silent because to me, every trade is the same.
The first trading principle of Mingde Company is to absolutely follow the trend, and to completely trust the trading system, and no one is allowed to violate the instructions issued by the trading system without authorization. Because of this, the company never fails a deal. In fact, transactions are divided into four types: successful transactions, failed transactions, profitable transactions, and losing money transactions. A trade that loses money is not necessarily a failed trade, but a trade that violates or does not follow the system's trading instructions must be a failed trade.
The second trading principle of Mingde Company is to control the risk to the minimum, and the loss of each transaction must be controlled at about 1%. This is a very important thing. You have to understand that the higher the risk you take per trade, the harder it is to control the performance of your trades. As long as you can control risks and follow the general trend of the market, you will definitely make money. Usually a trading system with a profit rate of 40% to 50% is good, but when the market is bad, even if it fails consecutively, the resulting loss will not exceed 10% at most, which is the benefit of risk control.
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