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    Courtesy of MercenaryTrader.com

    One of the best sites on the web for great trading wisdom.

    1325 You are what you do. A man is defined by his actions, not his memory. Total Recall

    1324

    If a self-reinforcing process goes on long enough it must eventually become

    unsustainable because either the gap between thinking and reality becomes too

    wide or the participant's bias becomes too pronounced. Hence, reflexiveprocesses that become historically significant tend to follow an initially self-

    reinforcing, but eventually self-defeating, pattern. That is what I call the boom/bust

    sequence. George Soros

    1323

    Usually some error in the act of valuation is involved. The most common error is a

    failure to recognize that a so-called fundamental value is not really independent of

    the act of valuation. That was the case in the conglomerate boom, where per-

    share earnings growth could be manufactured by acquisitions, and also in the

    international lending boom where the lending activities of the banks helped

    improve the debt ratios that banks used to guide them in their lending activity. George Soros

    1322

    Economic theory needs to be fundamentally reconsidered. There is an element ofuncertainty in economic processes that has been largely left unaccounted for... We

    must take a radically different view of the role that thinking plays in shaping events. George Soros

    1321

    Classical economic theory assumes that market participants act on the basis ofperfect knowledge. That assumption is false. The participant's perceptions

    influence the market in which they participate, but the market action also

    influences the participant's perceptions. They cannot obtain perfect knowledge of

    the market because their thinking is always affecting the market and the market is

    affecting their thinking. George Soros

    1320 If you really want to know yourself, just become a speculator. Trading proverb

    1319 There is no way one could produce results like ours without ups and downs. George Soros

    1318

    The real-time experiment turned out to be a very good idea because it stimulated

    my thinking. Having to explain my reasons for making decisions forced me tobecome more coherent; it imposed a certain discipline on me, which was very

    helpful. George Soros

    1317

    I felt it was too late to go short, but then I re-read my memo that predicted that they

    would go bust and I realized that it could never be too late. It was the only time I

    made more than 100 percent on my money on the short side because, as the

    stocks went down, I kept topping up my short positions. George Soros

    1316

    In their worship of logic and rationality, economists are amusingly short-sighted

    and irrational. Jack Sparrow

    1315

    When the California residential home market collapsed, the market thought the

    company might go broke, but it survived the test and we made a fortune. That is

    when I made the rule that one should own stocks when they have successfully

    passed a difficult test, but one should avoid them during the test — something that

    is easier said than done. George Soros1314 I am good at riding the tide, but not the ripples of a swimming pool. George Soros

    1313

    ...I am particularly keen on investment theses that the market is reluctant to

    accept. These are usually the strongest. George Soros

    1312

    [The danger in taking risks] stimulates me. But don't misunderstand what I am

    saying: I don't like danger; I like to avoid it. That is what makes my juices flow. George Soros

    1311

    There is nothing like danger to focus the mind, and I do need the excitement

    connected with taking risks in order to think clearly. It is an essential part of my

    thinking ability. Risk taking is, to me, an essential ingredient in thinking clearly. George Soros

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    1310

    Risk taking is painful. Either you are willing to bear the pain yourself or you try to

    pass it on to others. Anyone who is in a risk taking business but cannot face the

    consequences is no good. George Soros

    1309

    I am outside. I am a thinking participant and thinking means putting yourself

    outside the subject you think about. Perhaps it comes easier to me than to many

    others because I have a very abstract mind and I actually enjoy looking at things,

    including myself, from the outside. George Soros

    1308

    Most of the time we are punished if we go against the trend. Only at inflection

    points are we rewarded. George Soros

    1307

    I watch out for telltale signs that a trend may be exhausted. Then I disengage from

    the herd and look for a different investment thesis. Or, if I think the trend has been

    carried to excess, I may probe going against it. George Soros

    1306

    The prevailing wisdom is that markets are always right. I take the opposite

    position. I assume that markets are always wrong. Even if my assumption is

    occasionally wrong, I use it as a working hypothesis. George Soros

    1305

    Being so critical, I am often considered a contrarian. But I am very cautious about

    going against the herd; I am liable to be trampled on... Most of the time I am a

    trend follower, but all the time I am aware that I am a member of the herd and I am

    on the lookout for inflection points. George Soros1304 Are you gonna bark all day, little doggie, or are you gonna bite? Reservoir Dogs

    1303

    I come from the water, that weren't no easy thing... It's more than nature, it's like

    my destiny... The Toadies

    1302 'Get a hunch and bet a bunch.' Trading proverb

    1301

    When everyone 95% agrees on something — home prices will never decline,

    China can't be stopped, commodities can't go down, etc. — there is real risk of

    'everyone' taking a frying pan to the face. Jack Sparrow

    1300

    To others, being wrong is a source of shame; to me, recognizing my mistakes is a

    source of pride. Once we realize that imperfect understanding is the human

    condition, there is no shame in being wrong, only in failing to correct our mistakes. George Soros

    1299

    I look for conditions of disequilibrium. They send out certain signals that activate

    me. So my decisions are really made using a combination of theory and instinct. If

    you like, you may call it intuition. George Soros

    1298

    I work with hypotheses. I form a thesis about the anticipated sequence of events

    and then I compare the actual course of events with my thesis; that gives me a

    criterion by which I can evaluate my hypothesis. George Soros

    1297

    I would put it this way: I do not play according to a given set of rules; I look for

    changes in the rules of the game. George Soros

    1296 Making money in commodities is easy -- but just try to keep it. Trading proverb

    1295

    If you want to make a birthday cake from scratch, you must first create the

    universe. Carl Sagan

    1294

    That is the nature of pattern recognition, asking 'What can I infer about this

    situation based on similarities to what I already know and trust that I understand?'

    There is less emphasis on trying to reason out things on the basis that they arespecial because they are unique, which in a financial context is perhaps the

    definition of a speculation... It creates an impulse always to connect new

    knowledge to old and to primarily be interested in new knowledge that genuinely

    builds on the old. Alice Schroeder

    1293

    People who are psychologically and financially invested in a stock work very hard

    to resolve any newly arisen cognitive dissonance in favor of their vested interests. Alice Schroeder

    1292

    As humans, our brains aren't really wired to make good probabilistic decisions.

    (Actually, this is a huge understatement; many of us never fully grasp the ideas of

    probability and expectation at all.) Dan Harrington

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    1291

    But of course there is no secret; there is only the doing of all those little things,

    each one done correctly, time and again, until excellence in every detail becomes

    a firmly ingrained habit, an ordinary part of one's everyday life. Daniel F. Chambliss

    1290

    In the pursuit of excellence, maintaining mundanity is the key psychological

    challenge. In common parlance, winners don’t choke. Faced with what seems tobe a tremendous challenge or a strikingly unusual event, such as the Olympic

    Games, the better athletes take it as a normal, manageable situation ('It's just

    another swim meet,' is a phrase sometimes used by top swimmers at a major

    event such as the Games) and do what is necessary to deal with it. Daniel F. Chambliss

    1289

    Athletes move up to the top ranks through qualitative jumps: noticeable changes in

    their techniques, discipline, and attitude, accomplished usually through a change in

    settings (e.g., joining a new team with a new coach, new friends, etc.) who work at

    a higher level. Without such qualitative jumps, no major improvements

    (movements through levels) will take place... Daniel F. Chambliss

    1288

    Superlative performance is really a confluence of dozens of small skills or

    activities, each one learned or stumbled upon, which have been carefully drilledinto habit and then are fitted together in a synthesized whole. There is nothing

    extraordinary or superhuman in any one of those actions; only the fact that they

    are done consistently and correctly, and all together, produce excellence. Daniel F. Chambliss

    1287

    Every generation has its characteristic folly, but the basic cause is the same:

    People persist in believing that what has happened in the recent past will go on

    happening into the indefinite future, even while the ground is shifting under their

    feet. George J. Church

    1286

    A great company could be a terrible investment if its price rise has already more

    than discounted the bullish fundamentals. Conversely, a company that has been

    experiencing problems and is the subject of negative news could be a great

    investment if its price decline has more than discounted the bearish information. Jack Schwager

    1285

    When to get out of a position is as important as when to get in. Any market

    strategy that ignores trade liquidation is by definition incomplete. Jack Schwager

    1284

    Risk control should not be confused with fear of risk. A willingness to accept risk is

    probably an essential personality trait for a trader. Jack Schwager

    1283

    One of the greatest tragedies of life is the murder of a beautiful theory by a gang of

    brutal facts. Benjamin Franklin

    1282

    Even great traders sometimes have completely wrongheaded ideas when they

    start. They ultimately succeed, however, because they have the flexibility to

    change their approach. Jack Schwager

    1281

    Define a target, a strategy consistent with the target, a set of disciplines to follow,

    and risk management guidelines. Then trade, track, and evaluate your

    performance. Ari Kiev

    1280

    The objective of setting a target is not necessarily to reach it, but rather toestablish a standard against which to measure your performance. If you are not

    reaching your target, it forces you to focus on what you are doing wrong or what

    you may not be doing that you should. The target holds you to a higher standard of

    performance. Ari Kiev

    1279

    Believing that an outcome is possible makes it achievable. The classic example is

    Roger Bannister's penetration of the four-minute mile mark. Before he ran his sub

    four-minute mile in 1954, this feat was considered an impossible barrier that was

    beyond human physical capabilities. After he ran his so-called magic mile, many

    other runners suddenly began breaking this once seemingly impossible barrier. Ari Kiev

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    1278

    The mind must always be in the state of 'flowing,' for when it stops anywhere that

    means the flow is interrupted and it is this interruption that is injurious to the well-

    being of the mind. In the case of the swordsman, it means death. When the

    swordsman stands against his opponent, he is not to think of the opponent, nor of

    himself, nor of his enemy's sword movements. He just stands there with his sword

    which, forgetful of all technique, is ready only to follow the dictates of the

    subconscious. The man has effaced himself as the wielder of the sword. When hestrikes, it is not the man but the sword in the hand of the man's subconscious that

    strikes. Zen master Takuan

    1277

    The mind could be said to be working at a very high speed, but with no intentions,

    plans or direction. In analogy a clear mind is compared to a still pond, which is able

    to clearly reflect the moon and trees. But just as waves in the pond will distort the

    picture of reality, so will the thoughts we hold onto disrupt the true perception of

    reality. Wikipedia (Mushin)

    1276

    Mushin is achieved when a person's mind is free from thoughts of anger, fear, or

    ego during combat or everyday life. There is an absence of discursive thought and

     judgment, so the person is totally free to act and react towards an opponent

    without hesitation and without disturbance from such thoughts. At this point, a

    person relies not on what they think should be the next move, but what is theirtrained natural reaction or what is felt intuitively. Wikipedia (Mushin)

    1275

    Clouds are not spheres, mountains are not cones, coastlines are not circles, and

    bark is not smooth — nor does lightning travel in a straight line. Benoit Mandelbrot

    1274

    Think. Prepare. Plan in advance when there's no time pressure. Then, in real life,

    do what you said. Mike Bloomberg

    1273

    Being a great trader is a process. It's a race with no finish line. The markets are

    not static. No single style or approach can provide superior results over long

    periods of time. To continue to outperform, the great traders continue to learn and

    adapt. Jack Schwager

    1272

    You can't control what the market does, but you can control your reaction to the

    market. I examine what I do all the time. That's what trading is all about. Steve Cohen

    1271

    You can't have everybody on one side of the fence. The world doesn't work that

    way. Steve Cohen

    1270

    When I saw that screen light up that day in the Merrill Lynch offices, I lost any

    residual doubt that Bloomberg could make it. We had picked just the right project.

    It was big enough to be useful, small enough to be possible. Start with a small

    piece, fulfill one goal at a time, on time. Do it with all things in life. Sit down and

    learn to read one-syllable words. If you try to read Chaucer in elementary school,

    you'll never accomplish anything. You can't jump to the end game right away, in

    computers, politics, love, or any other aspect of life. Mike Bloomberg

    1269

    I have friends who get emotional about the market. They fight it. Why put yourself

    in that position? Steve Cohen

    1268

    The thing is to start moving your feet. I find that too many traders just stand there

    and let the truck roll over them. Steve Cohen

    1267

    If I am in a trade because of a catalyst, the first thing I check is whether the

    catalyst still applies. Steve Cohen

    1266

    [Wharton] taught you that 40 percent of a stock's price movement was due to the

    market, 30 percent to the sector, and only 30 percent to the stock itself, which is

    something that I believe is true. I don't know if the percentages are exactly correct,

    but conceptually the idea makes sense. Steve Cohen

    1265

    Whatever attitude you are in, do not be conscious of making the attitude; think only

    of cutting. Miyamoto Musashi

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    1264

    Hand reading works because most players play most hands in a relatively logical

    way most of the time. By bringing logic to bear on their decisions, you can keep

    eliminating hands that don't fit the observed data. Dan Harrington

    1263

    If you can get savage capitalists to rationally act like a team, then you have a

    beautiful thing. Cliff Asness

    1262 They can steal your idea, but they can't steal execution. Silicon Valley proverb

    1261David didn't beat Goliath with a whiteboard. Go get amongst it, and prepare to boband weave. Tim Ferriss

    1260

    It comes down to trying to expose yourself to the best things that humans have

    done — and then try to bring those things into what you're doing. Steve Jobs

    1259

    A market that is driven by inflows can have small corrections, but it has to then

    immediately recover to new highs to keep generating new money inflows.

    Otherwise, money inflows are likely to dry up, and the market will fall apart.

    Therefore, this type of market is likely to either trend higher or break sharply. John Bender

    1258

    Each stock has its own probability distribution that depends on a host of factors.

    Who has what position? Where did the major buyers accumulate their positions?

    Where are their stop-loss points? What price levels are likely to be technically

    significant? John Bender

    1257

    It's not a matter of coming up with a one-size-fits-all model that is better than the

    standard Black-Scholes model. The key point is that the correct probability

    distribution is different for every market and every time period. The probabilitydistribution has to be estimated on a case-by-case basis. John Bender

    1256

    Regardless of whether technical analysis has any validity, enough people believe

    in it to impact the market. For example, if people expect a stock to find support at

    65, lo and behold, they're willing to buy it at 66. That is not a random walk

    statement. John Bender

    1255

    It might seem that if you have an edge, the way to maximize the edge is to trade as

    big as you can. But that's not the case, because of risk. As a professional gambler

    or as a trader, you are constantly walking the line between maximizing edge and

    minimizing your risk of tapping out. John Bender

    1254

    I don't think anyone is more disciplined than I am. When I put on a trade, I have a

    contingency plan for every possible outcome. I can't think of any circumstance that

    would be an exception. If there were, I would have a plan for that too. Mark Minervini

    1253

    Normal human tendencies are traits that cause you to do poorly. Therefore, to be

    successful as a trader you need to condition abnormal responses. You hear many

    traders say that you have to do the opposite of your gut response — when you feel

    good about a position you should sell, and when you feel terrible about it, you

    should buy more. In the beginning that's true, but as you condition yourself for

    abnormal responses, somewhere along the line you become skilled. Then your gut

    becomes right. Mark Minervini

    1252

    I would rather get stopped out of a trade five times in a row, taking a small loss

    each time, than take one large loss. Mark Minervini

    1251

    Most people just cannot weather the learning curve. As soon as it gets difficult, and

    their approach isn't working up to their expectations, they begin to look for

    something else. As a result, they become slightly efficient in many areas without

    becoming very good in any single methodology. The reality is that it takes a very

    long time to develop a superior approach, and along the way, you are going to go

    through periods where you do poorly. Ironically, those are the periods that give you

    the most valuable information. Mark Minervini

    1250

    First and foremost, understand that you will always make mistakes. The only way

    to prevent mistakes from turning into disasters is to accept losses while they are

    small and then move on. Mark Minervini

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    1249

    I constantly try to figure out how the market can trick or fool the majority of

    investors. Then after the majority have been fooled I get in at what I call the 'point

    of smooth sailing.' A so-called failed signal can actually be the beginning of a more

    complex pattern that is far more reliable than the initial signal based on a

    conventional pattern. Mark Minervini

    1248

    Let's say I buy a stock because of a signal and the market dips enough to stop meout. The stock then witnesses a huge reversal and closes near the high of the day.

    That price action may be an indication that there was a shakeout, which knocked

    out most of the weak hands, and the stock is ready to go up. Putting the long back

    on at that point may well be a higher probability trade than the original trade. Mark Minervini

    1247

    You can't get beat if you have a great defense. I would always prefer to bet on a

    football team that has a great defense as opposed to one that has a great offense.

    If a trade doesn't work out quickly, I take a small loss, and I may have to take a

    small loss many times. Mark Minervini

    1246

    The key is to know when to do nothing. Most people, even if they have a winning

    strategy, will not follow it because they lack discipline. Mark Minervini

    1245 I think that anyone who wants to be a trader should learn how to play poker. Mark Minervini

    1244

    My results were transformed when I understood that what counts isn't how often

    you're right, but how much you profit on your winning trades versus how much you

    lose on your losing trades. On average, I'm only profitable about 50 percent of thetime, but I make much more when I'm right than I lose when I'm wrong. Mark Minervini

    1243

    If you are a beginner, trade with an amount of money that is small enough so that

    you can afford to lose it, but large enough so that you will feel the pain if you do.

    Otherwise, you're fooling yourself. Mark Minervini

    1242

    It is much better to learn the lesson that you can lose everything when you don't

    have that much money than to learn the same lesson later on. Mark Minervini

    1241

    Containing your losses is 90 percent of the battle, regardless of the strategy. In

    addition, if you put yourself in a position to buy stocks that have the potential to go

    up a lot, your odds will be better. Mark Minervini

    1240

    You have all these people trying to come up with formulas to beat the market. The

    market is not a science. The science may help increase the probabilities, but to

    excel you need to master the art of trading. Mark Minervini

    1239

    My basic philosophy is: Expose your portfolio to the best stocks that the market

    has to offer and cut your losses very quickly when you're wrong. That one

    sentence essentially describes my strategy. Mark Minervini

    1238

    The motivation is always the same. Although I may hold the position much longer, I

    am buying the stock because I think it will go up within hours or at most days. Mark Minervini

    1237

    When you buy an option, the premium steadily evaporates over time. It's like

    holding an ice cube in your hand: the longer it's there, the more it diminishes until

    finally it doesn't exist at all. Mark Cook

    1236Bad traders don't make profits — they only take out short-term loans from themarket. Wall Street proverb

    1235 When the levee breaks, momma you got to move... Led Zeppelin

    1234

    When everything happens at once, wide and fast moving problems simply route

    around any central authority. Therefore overall governance must arise from the

    most humble interdependent acts done locally in parallel, and not from a central

    command. Kevin Kelly

    1233

    The work of managing a natural environment is inescapably a work of local

    knowledge. Kevin Kelly

    1232 In turbulence is the preservation of the world. Kevin Kelly

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    1231

    The nature of life is to delight in all possible loopholes. Every creature is in some

    way hacking a living by reinterpreting the rules. Kevin Kelly

    1230 'It works, why worry?' is life's deepest philosophy. Kevin Kelly

    1229 A network nurtures small failures in order that large failures don't happen as often. Kevin Kelly

    1228

    There is nothing to be found in a beehive that is not submerged in a bee. And yet

    you can search a bee forever with cyclotron and fluoroscope, and you will neverfind a hive. Kevin Kelly

    1227 Complexity must be grown from simple systems that already work. Kevin Kelly

    1226

    Hope should never be in your vocabulary. It is the worst four-letter word I know. As

    soon as you say, 'Boy, I hope this position comes back,' you should reduce your

    size. Mark Cook

    1225

    I would attribute my own success to having both conviction about my gut feelings

    and the ability to act on them quickly. That is so critical. Stuart Walton

    1224

    When I talk to potential new investors I focus on my mistakes. Because if you are

    going to invest with someone, you want that person to have made mistakes on his

    own tab and not to make them on yours. Someone who has never made a mistake

    is dangerous, because mistakes will happen. If you've made mistakes, you realize

    they can recur, and it makes you more careful. Stuart Walton

    1222

    Hazarding guesses (extremely rough ones, for that matter) about the behavior of a

    population has some meaning. It is, however, almost impossible to foresee the

    behavior of an individual, even on a day-to-day basis. In the same way, thephysicist can prognosticate with great exactitude the time a gram of radium will

    need to halve its activity but is totally unable to say when a single atom of that

    same radium will disintegrate. Primo Levi

    1221 Patience was still needed, in unforeseeable doses; yet more patience. Primo Levi

    1220

    This company looks cheap, that company looks cheap, but the overall economy

    could completely screw it up. The key is to wait. Sometimes the hardest thing to do

    is to do nothing. David Tepper

    1219A foolish consistency is the hobgoblin of little minds. Ralph Waldo Emerson

    1218 Give me a horse I can ride! John Facenda

    1217

    Sometimes the opportunities are so obvious that you almost can't lose when they

    come around; the only problem is that they don't come around that often. The key

    is not to lose money in the times in between. Stuart Walton

    1216

    My philosophy is to float like a jellyfish and let the market push me where it wants

    to go. I don't draw a line in the sand and say this is my strategy and I'm going to

    wait for the market to come to me. I try to figure out what strategies are working in

    the market. Stuart Walton

    1215

    To me, the successful stock is not one that I bought at 10 and held to a 100, but

    one where I picked up 7 points here, 5 points here, another 8 here, and caught a

    major part of the move. Stuart Walton

    1214

    The theme I noticed back then that has persisted through bull and bear markets is:

    Good companies, on balance, continue to go up. Grandmothers in Kansas Cityknow that. Stuart Walton

    1213

    I really admire people who do what they want to do and don't care about anything

    else. I had a friend in college who was determined to be a rock and roll star. He

    formed the band The Cowboy Junkies. When he started college, he couldn't even

    play a guitar, and now he is sold out at every concert. Stuart Walton

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    1199

    The people who want to be recognized as the greatest traders are probably not the

    greatest traders. Egos get in the way of the process. In my opinion, you never want

    to be the largest player in the pit. Blair Hull

    1198

    In a sense, I owe everything that I have to the state of Nevada. It not only provided

    me with my original trading stake, but the betting experience taught me a lot of

    things that allowed me to become a successful trader. Blair Hull

    1197If you get too careful about not risking your gains, you're not going to be able toextract a large profit. Mark Ritchie

    1196

    You need to have the courage to stand up against the crowd, decide your position,

    and execute it. Mark Ritchie

    1195

    Magnitude of losses and profits is purely a matter of position size. Controlling

    position size is indispensable to success. Of all the traits necessary to trade

    successfully, this factor is the most undervalued. Mark Ritchie

    1194

    Understand that learning the markets can take years. Immerse yourself in the

    world of trading and give up everything else. Get as close to other successful

    traders as you can.

    Linda Bradford

    Raschke

    1193 Fall down seven times, stand up eight. Japanese Proverb

    1192

    Part of the trading process is testing the water. If your entry timing is good enough,

    you won't lose much even when you're wrong.

    Linda Bradford

    Raschke

    1191

    I think investment psychology is by far the most important element, followed by risk

    control, with the least important consideration being the question of where you buy

    and sell. Tom Basso

    1190

    I liken emotions in trading to a spring, with emotions being stretched up and down,

    up and down. While it's going up and down, it's kind of thrilling, but eventually the

    spring wears out. Burnout sets in, and you realize that maybe it isn't so much fun

    to be on this emotional roller coaster. You find that if you can just keep your

    emotions in balance in the middle, it's actually a whole lot more fun. Tom Basso

    1189

    I'm fond of thinking of trading in terms of scores of years. If I live long enough, I'll

    trade for fifty or sixty years. I figure that, over that time span, I'll see devastating

    declines, spectacular advances that I virtually can't believe, and everything in

    between. Tom Basso

    1188

    After my years of experience in the markets, I now try to keep my models as

    flexible as I possibly can. I try to imagine scenarios that would almost make good

    movie plots. Tom Basso

    1187

    I know this will sound like a cliche, but the single most important reason that

    people lose money in financial markets is that they don't cut their losses short. It is

    a curiosity of human nature that no matter how many books talk about this rule,

    and no matter how many experts offer this advice, people still keep making the

    same mistake. Victor Sperandeo

    1186

    We are still a multimedia organism. If we want to push the envelope of complexity

    further, we have to use all of our devices for accessing information — not all of

    which are rational.

    Mihaly

    Csikszentmihalyi

    1185

    The ego falls away. Time flies. Every action, movement, and thought followsinevitably from the previous one, like playing jazz. Your whole being is involved,

    and you're using your skills to the utmost.

    Mihaly

    Csikszentmihalyi

    1184

    Choiceless awareness is a quality of mind that is free from making judgments,

    decisions or generating commentary as it meets with sense experiences. It is a

    mind that responds to each new moment without the burden of its past history or

    making future projections. Matthew Flickstein

    1183

    To watch the behavior of a man who acts not according to reason, but according to

    his own deep impulses, is a spectacle of extreme interest, similar to that which the

    naturalist enjoys when he studies the activities of an animal of complex instincts. Primo Levi

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    1182

    The ultimate result of shielding men from the effects of folly is to fill the world with

    fools. Herbert Spencer

    1181

    In my opinion, the greatest misconception is the idea that if you buy and hold

    stocks for long periods of time, you'll always make money. Victor Sperandeo

    1180

    In trading, you can't hide your failures. Your equity provides a daily reflection of

    your performance. The trader who tries to blame his losses on external events will

    never learn from his mistakes. Victor Sperandeo

    1179

    The key to trading success is emotional discipline. 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. Victor Sperandeo

    1178

    Successful speculation implies taking risk when the odds are in your favor. Just

    like in poker, where you have to know which hands to bet on, in trading you have

    to know when the odds are in your favor. Victor Sperandeo

    1177

    The fact that we live at the bottom of a deep gravity well, on the surface of a gas-

    covered planet going around a nuclear fireball 90 million miles away, and think this

    to be normal, is obviously some indication of how skewed our perspective tends to

    be. Douglas Adams

    1176

    A trading philosophy is something that cannot just be transferred from one person

    to another, it's something that you have to acquire yourself through time and effort. Richard Driehaus

    1175

    The essential element is having a core philosophy. Without a core philosophyyou're not going to be able to hold on to your positions or stick with your trading

    plan during really difficult times. You must fully understand, strongly believe in, and

    be totally committed to your trading philosophy. Richard Driehaus

    1174

    Most people believe high turnover is risky, but I think just the opposite. High

    turnover reduces risk when it's the result of taking a series of small losses in order

    to avoid larger losses. I don't hold on to stocks with deteriorating fundamentals or

    price patterns. For me, this kind of turnover makes sense. It reduces risk; it doesn't

    increase it. Richard Driehaus

    1173

    The wonderful thing about our business is that it's liquid, and you can wipe the

    slate clean on any day. As long as I'm in control of the situation — that is, as long

    as I can cover my positions — there's no reason to be nervous. Stan Druckenmiller

    1172

    In secular bear markets, fighting general conditions is an expensive habit. Wall

    Street is addicted to this habit by design. Jack Sparrow

    1171 Survive and advance. Jim Valvano

    1170

    The more extensive a man's knowledge of what has been done, the greater will be

    his power of knowing what to do. Benjamin Disraeli

    1169 The secret of success is constancy of purpose. Benjamin Disraeli

    1168 Nurture your mind with great thoughts; to believe in the heroic makes heroes. Benjamin Disraeli

    1167 What we learn from history is that we do not learn from history. Benjamin Disraeli

    1166

    Wall Street ices the inefficient cake with compulsive conformity. Everyone gets on

    the bandwagon and stays until the evidence is too compelling, then they all fall off

    with a jolt.

    The Art of Short

    Selling

    1165

    Soros has taught me that when you have tremendous conviction on a trade, you

    have to go for the jugular. It takes courage to be a pig. It takes courage to ride a

    profit with huge leverage. As far as Soros is concerned, when you're right on

    something, you can't own enough. Stan Druckenmiller

    1164

    I've learned many things from [George Soros], but perhaps the most significant is

    that it's not whether you're right or wrong that's important, but how much money

    you make when you're right and how much you lose when you're wrong. The few

    times that Soros has ever criticized me was when I was really right on a market

    and didn't maximize the opportunity. Stan Druckenmiller

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    1163

    The way to attain truly superior long-term returns is to grind it out until you're up 30

    or 40 percent, and then if you have the convictions, go for a 100 percent year. If

    you can put together a few near-100 percent years and avoid down years, then

    you can achieve really outstanding long-term returns. Stan Druckenmiller

    1162

    George Soros has a philosophy that I have also adopted: The way to build long-

    term returns is through preservation of capital and home runs. You can be far more

    aggressive when you're making good profits. Stan Druckenmiller

    1161

    I never use valuation to time the market. I use liquidity considerations and

    technical analysis for timing. Valuation only tells me how far the market can go

    once a catalyst enters the picture to change the market direction. Stan Druckenmiller

    1160

    Frankly, even today, many analysts still don't know what makes their stocks go up

    or down. Stan Druckenmiller

    1159

    The essential element is that the markets are ultimately based on human

    psychology, and by charting the markets you're merely converting human

    psychology into graphic representations. Al Weiss

    1157

    The most liquid period is the opening. Liquidity starts falling off pretty quickly after

    the opening. The second most liquid time of day is the close. Trading volume

    typically forms a U-shaped curve throughout the day. There's a lot of liquidity rightat the opening, it then falls off, reaching a nadir at midday, and then it starts to

    climb back up, reaching a secondary peak on the close. Generally speaking, this

    pattern holds in almost every market. It's actually pretty amazing. Monroe Trout

    1156

    The desire to maximize the number of winning trades (or minimize the number of

    losing trades) works against the trader. The success rate of trades is the least

    important performance statistic and may even be inversely related to performance. William Eckhardt

    1155

    The market behaves much like an opponent who is trying to teach you to trade

    poorly... The market likes to lull you into the false security of high success rate

    techniques, which often lose disastrously in the long run. The general idea is that

    what works most of the time is nearly the opposite of what works in the long run. William Eckhardt

    1154

    When you're on a big winning streak, there's a temptation to think that you're doing

    something special, which will allow you to continue to propel yourself upward. You

    start to think that you can afford to make shoddy decisions. You can imagine what

    happens next. As a general rule, losses make you strong and profits make you

    weak. William Eckhardt

    1153

    While amateurs go broke by taking large losses, professionals go broke by taking

    small profits. The problem in a nutshell is that human nature does not operate to

    maximize gain but rather to maximize the chance of a gain. William Eckhardt

    1152

    One common adage on this subject that is completely wrongheaded is: You can't

    go broke taking profits. That's precisely how many traders do go broke. William Eckhardt

    1151

    Watch idly while profit-taking opportunities arise, but in adversity run like a

     jackrabbit. William Eckhardt

    1150

    Anyone with average intelligence can learn to trade. This is not rocket science.

    However, it's much easier to learn what you should do in trading than to do it.

    Good systems tend to violate normal human tendencies. Of the people who can

    learn the basics, only a small percentage will be successful traders. William Eckhardt

    1149 To conquer fate, go ahead and meet it. Dickson G. Watts

    1148

    I haven't seen much correlation between good trading and intelligence. Some

    outstanding traders are quite intelligent, but a few aren't. Many outstandingly

    intelligent people are horrible traders. Average intelligence is enough. Beyond that,

    emotional makeup is more important. William Eckhardt

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    1147

    Trading size is one aspect you don't want to optimize. The optimum comes just

    before the precipice. William Eckhardt

    1146

    The desire to find patterns is the same human quirk that convinces people that

    there is validity in superstitions, or astrology, or fortune tellers. The successes are

    much more startling than the failures. You remember the times when the oracle

    really hit the nail on the head, and you tend to forget the cases in which the

    prediction was ambiguous or wrong. William Eckhardt

    1145

    The human mind was made to create patterns. It will see patterns in random data.

    A turn-of-the-century statistics book put it this way: 'Too fine an eye for pattern will

    find it everywhere.' William Eckhardt

    1144

    As a general rule, be very skeptical of your results. The better a system looks, the

    more adamant you should be in trying to disprove it. This idea goes very much

    against human nature, which wants to make the historical performance of a system

    look as good as possible. William Eckhardt

    1143

    The lack of intrinsic meaning of angles on a bar chart has significance even for

    chart-oriented traders who do not employ angles. How sharply a trend slopes on a

    chart is often a psychological consideration in making a trade. If you fall prey to

    this influence, you're letting the chart maker's practical and aesthetic

    considerations impinge on your trading. Any trend can be made to look eithergentle or steep by adjusting the price scale. William Eckhardt

    1142

    In general, the delicate tests that statisticians use to squeeze significance out of

    marginal data have no place in trading. We need blunt statistical instruments,robust techniques. William Eckhardt

    1141

    Sometimes the reason people lose is that they're not sufficiently selective. Upon

    analysis, a trader may find that if he only concentrates on the trades that do well

    and lets go of the other types of trades, he might actually be successful. Randy McKay

    1140

    One very interesting thing I've found is that virtually every successful trader I know

    ultimately ended up with a trading style suited to his personality. Randy McKay

    1139

    When you're trading well, you have a better mental attitude. When you're trading

    poorly, you start wishing and hoping. Instead of getting into trades you think will

    work, you end up getting into trades you hope will work. Randy McKay

    1138

    The most important advice is to never let a loser get out of hand... I'll keep on

    reducing my trading size as long as I'm losing. I've gone from trading as many as

    three thousand contracts per trade to as few as ten when I was cold, and then

    back again. Randy McKay

    1137

    One of the things I did that worked in those early years was analyzing every single

    trade I made. Every day, I made copies of my cards and reviewed them at home.

    Every trader is going to have tons of winners and losers. You need to determine

    why the winners are winners and the losers are losers. Once you can figure that

    out, you can become more selective in your trading and avoid those trades that are

    more likely to be losers. Randy McKay

    1136

    You don't want to have a position before a move has started. You want to wait until

    the move is already under way before you get into the market. Randy McKay

    1135

    The beginning of a price move is usually hard to trade because you're not sure

    whether you're right about the direction of the trend. The end is hard because

    people start taking profits and the market gets very choppy. The middle of the

    move is what I call the easy part. Randy McKay

    1134

    So many people want the positive rewards of being a successful trader without

    being willing to go through the commitment and pain. And there's a lot of pain. Bill Lipschutz

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    1133

    It's not enough to simply have the insight to see something apart from the rest of

    the crowd, you also need to have the courage to act on it and to stay with it. It's

    very difficult to be different from the rest of the crowd the majority of the time,

    which by definition is what you're doing if you're a successful trader. Bill Lipschutz

    1132

    The really best traders don't think twice about how many hours they're working or

    whether they come in on a weekend. There's no substitute for that level ofcommitment. Bill Lipschutz

    1131

    [Superior] traders have tremendous commitment to the markets — to their craft, so

    to speak. They develop scenarios, reevaluate scenarios, collect information, and

    reevaluate that information. They constantly ask themselves: What am I doing

    right? What am I doing wrong? How can I do what I am doing better? How can I

    get more information? It's obsessive. Bill Lipschutz

    1130

    ...playing out scenarios is something that I do all the time. That is a process a

    fundamental trader goes through constantly. What if this happens? What if this

    doesn't happen? How will the market respond? What levels will the market move

    to? Bill Lipschutz

    1129

    I don't have a problem letting my profits run, which many traders do. You have tobe able to let your profits run. I don't think you can consistently be a winning trader

    if you're banking on being right more than 50 percent of the time. Bill Lipschutz

    1128

    You have to trade at a size such that if you're not exactly right in your timing, youwon't be blown out of your position. My approach is to build to a larger size as the

    market is going my way. Bill Lipschutz

    1127

    Foreign exchange is a very psychological market... if you move the market 4

    percent, for example, you're probably going to change the market psychology for

    the next few days. Bill Lipschutz

    1126

    When you're in a losing streak, your ability to properly assimilate and analyze

    information starts to become distorted because of the impairment of the confidence

    factor, which is a by-product of a losing streak. You have to work very hard to

    restore that confidence, and cutting back trading size helps achieve that goal. Bill Lipschutz

    1125

    There are a lot of elements to risk control: Always know exactly where you stand.

    Don't concentrate too much of your money on one big trade or group of highly

    correlated trades. Always understand the risk-reward of the trade as it now stands,

    not as it existed when you put the position on. Bill Lipschutz

    1124

    Not everyone is going to interpret things in the same way, at the same time, as you

    do, and it's important to understand that. You need to be plugged into the news

    and to know what the market is looking at. For example, one day the foreign

    exchange market may be focusing on interest rate differentials; the next day the

    market may be looking at potential for capital appreciation, which is exactly the

    opposite. Bill Lipschutz

    1123

    We cannot grow without challenge. Challenges routinely produce crises that

    severely test us. However, crises also offer us the greatest opportunities. Steven Callahan

    1122

    ...voyaging through wildernesses, be they full of woods or waves, is essential to

    the growth and maturity of the human spirit. It is in the wilderness that you really

    learn who you are. It is in facing the challenges of the wilderness that the thickness

    of your wallet becomes irrelevant and your capabilities become the truer measure

    of your value. Steven Callahan

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    1121

    The freedom of the sea lures men, yet freedom does not come free. Its cost is the

    loss of the security of life on land. When a storm is brewing, the sailor cannot

    simply park his ship and walk away from it. He cannot hide within stone walls until

    the whole thing blows over. There is no freedom from nature, the power that binds

    even the dead together. Sailors are exposed to nature's beauty and her ugliness

    more intensely than most men ashore. I have chosen the sailor's life to escape

    society's restrictions and I have sacrificed its protection. I have chosen freedomand I have paid the price.

    Adrift: 76 Days Lost AtSea

    1120

    The most appropriate description of man as differentiated from nonhuman beings

    is: a being purposively struggling against the forces adverse to his life. Ludwig Von Mises

    1119

    There are many who find a good alibi far more attractive than an achievement. For

    an achievement does not settle anything permanently. We still have to prove our

    worth anew each day; we have to prove that we are as good today as we were

    yesterday. But when we have a valid alibi for not achieving anything we are fixed,

    so to speak, for life. Eric Hoffer

    1118 Most battles are won before they are ever fought.

    General George S.

    Patton

    1117 Life shrinks or expands in proportion to one's courage. Anais Nin

    1116

    Reason's biological function is to preserve and promote life and to postpone itsextinction as long as possible. Thinking and acting are not contrary to nature; they

    are, rather, the foremost features of man's nature. Ludwig Von Mises

    1115

    You've got to think about doing big things while you're doing small things, so all thesmall things go in the right direction. Alvin Toffler

    1114

    When you really believe that trading is simply a probability game, concepts like

    'right' and 'wrong' or 'win' and 'lose' no longer have the same significance. As a

    result, your expectations will be in harmony with the possibilities. Mark Douglas

    1113

    How much heat can you stand? Money management is a thermostat — a control

    system for risk that keeps your trading within the comfort zone. Gibbons Burke

    1112

    Everyone has talent. What is rare is the courage to follow the talent to the dark

    place where it leads. Erica Jong

    1111

    Take your life in your own hands and what happens? A terrible thing: no one to

    blame. Erica Jong

    1110 If you don't risk anything, you risk even more. Erica Jong

    1109

    The biggest cause of trouble in the world today is that the stupid people are so

    sure about things and the intelligent folks are so full of doubts. Bertrand Russell

    1108 You will run out of money before a guru runs out of indicators. Neil Weintraub

    1107 I have no special talents. I am only passionately curious. Albert Einstein

    1106 Everyone's entitled to their own opinion, but they're not entitled to their own facts. Donald Rumsfeld

    1105

    Do not believe in anything simply because you have heard it. Do not believe in

    anything simply because it is spoken and rumored by many. Do not believe in

    anything simply because it is found written in your religious books. Do not believe

    in anything merely on the authority of your teachers and elders. Do not believe intraditions because they have been handed down for many generations. But after

    observation and analysis, when you find that anything agrees with reason, and is

    conducive to the good and benefit of one and all, then accept it and live up to it. Siddhartha Gautama

    1104

    500 fights, that's the number I figured when I was a kid. 500 street fights and you

    could consider yourself a legitimate tough guy. You need 'em for experience. To

    develop leather skin. So I got started. Of course, along the way you stop thinking

    about being tough and all that. It stops being the point. You get past the silliness of

    it all. But then, after, you realize that's what you are. Knockaround Guys

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    1103

    If you can preserve your financial and mental capital when others have depleted or

    squandered theirs, the long-term rewards will be great. Jack Sparrow

    1102

    The illiterate of the 21st century will not be those who cannot read and write, but

    those who cannot learn, unlearn, and relearn. Alvin Toffler

    1101 Reason is the main resource of man in his struggle for survival. Ludwig Von Mises

    1100

    It may be readily conceived that if men passionately bent upon physical

    gratifications desire greatly, they are also easily discouraged; as their ultimateobject is to enjoy, the means to reach that object must be prompt and easy or the

    trouble of acquiring the gratification would be greater than the gratification itself.

    Their prevailing frame of mind, then, is at once ardent and relaxed, violent and

    enervated. Death is often less dreaded by them than perseverance in continuous

    efforts to one goal. Alexis de Tocqueville

    1099 Fat, drunk and stupid is no way to go through life, son. Animal House

    1098

    When I started writing I thought if I proved X was a stupid thing to do that people

    would stop doing X. I was wrong. Bill James

    1097

    It seems LTCM could have survived one Nobel prize-winner, but with two, they

    were doomed. Frederic Townsend

    1096

    The success of options valuation is the story of a simple, asymptotically correct

    idea, taken more serious than it deserved, and then used extravagantly, withhubris, as a crutch to human thinking. Emanuel Derman

    1095 Success demands singleness of purpose. Vince Lombardi

    1094

    If all it took to beat the markets was a P.h.D in mathematics, there'd be a hell of alot of rich mathematicians out there. Bil Dries

    1093

    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

    1092 It is a capital mistake to theorize before one has data. Sir Arthur Conan Doyle

    1091 Losing an illusion makes you wiser than finding a truth. Ludwig Borne

    1090

    Portfolio structuring, risk management, execution strategies, capital management,

    and leverage management may not be directly connected to the algorithm that

    generates the buy and sell signals, but they are all hugely important. Bruce Cleland

    1089

    The mathematics are very important, but it's only one piece of the puzzle. The

    most important thing overall is the total investment process, of which the signal

    generator is an important part. Bruce Cleland

    1088 Measure what is measurable, and make measurable what is not so. Galileo Galilei

    1087

    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

    1086

    Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on

    the way up. Keep your eye open at the top. Ed Seykota

    1085 Everything flows. Heraclitus

    1084 Life is a school of probability. Walter Bagehot

    1083

    We have made our business managing risk. We are comfortable with risk and we

    get our reward from risk. John W. Henry

    1082

    Since investors are human and make mistakes, they're never 100% sure of their

    vision and whether or not their view is correct. So price adjustments take time as

    they fluctuate and a new consensus is formed in the face of changing market

    conditions and new facts. For some changes this consensus is easy to reach, but

    there are other events that take time to formulate a market view. It's those events

    that take time that form the basis of our profits. John W. Henry

    1081 Man's expectations manifest in trends. John W. Henry

    1080 Money management is the true survival key. Bill Dunn

    1079 The beginning is the most important part of the work. Plato

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    1078 Free markets will always find their own means of price discovery. Keith Campbell

    1077

    Government regulation and intervention have been, are, and will continue to be

    present for as long as society needs rules by which to live. Today's governmental

    intervention or decree is tomorrow's opportunity. Keith Campbell

    1076

    The people that I know who are the most successful at trading are passionate

    about it. They fulfill what I think is the first requirement: developing intuitions aboutsomething they care about deeply, in this case, trading... 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

    1075

    My dear, one can make just as much money from the destruction of a civilization

    as from the building of it. Gone With the Wind

    1074

    There is nothing more difficult to take in hand, more perilous to conduct, or more

    uncertain in its success, than to take the lead in the introduction of a new order of

    things. Niccolo Machiavelli

    1073

    Speculation [is] dealing with the uncertain conditions of the unknown future. Every

    human action is a speculation in that it is embedded in the flux of time. Ludwig Von Mises

    1072To be aware how fruitful the playful mood can be is to be immune to thepropaganda of the alienated, which extols resentment as a fuel of achievement. Eric Hoffer

    1071 Fish see the bait, but not the hook; men see the profit, but not the peril. Chinese proverb

    1070

    Education rears disciples, imitators, and routinists, not pioneers of new ideas andcreative geniuses. The schools are not nurseries of progress and improvement,

    but conservatories of tradition and unvarying modes of thought. Ludwig Von Mises

    1069

    You have to stop trying to will things to happen in order to prove that you're right.

    Listen only to what the market is telling you now. Forget what you thought it was

    telling you five minutes ago. The sole objective of trading is not to prove you're

    right, but to hear the cash register ring. Marty Schwartz

    1068

    Trading is a psychological game. Most people think that they're playing against the

    market, but the market doesn't care. You're really playing against yourself. Marty Schwartz

    1067

    If the market gets negative news and the market shrugs it off and it continues to go

    up, this is a bullish reaction because it means the market has already discounted

    the news. On the other hand, a sign of a fully priced market is one that reacts

    poorly to good news. Marty Schwartz

    1066

    Technical indicators that show me low-risk entry points for high probability trades

    are at the core of my methodology. But I am always intensely searching for

    patterns, setups, recurring themes, no matter how small, to help further swing the

    odds in my favor on a given trade. Marty Schwartz

    1065

    When I was in the first grade, the teacher asked each of us what we wanted to be

    when we grew up. I said, 'a detective.' This investigative nature has carried

    through into adulthood. I love searching for clues, synthesizing tons of unrelated

    data, and arriving at a logical conclusion. While these observations are not entirely

    scientific, they are things I've seen repeatedly over the years. Marty Schwartz

    1064

    Your trading methodology has to fit your personality. You have to understand your

    strengths and your weaknesses. It took me nine years to figure myself out. Marty Schwartz

    1063

    When you're in a losing position and you're brainlocked, do whatever's necessary

    to help clear your head. Whether you're a pro or an amateur, you cannot lose your

    objectivity. Marty Schwartz

    1062

    Wall Street doesn't want to see the emperor naked. He may be old and fat and

    flabby, but they don't want to know it. They want to see him regal and royal in all

    his majesty. And as long as they see him that way, that's the way he is, because

    they keep on buying. Big ball keep on rolling. Marty Schwartz

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    1061

    It behooves those who are genetically predisposed to a bearish position to

    remember that markets have a logic of their own. John Mauldin

    1060

    Don't get in a shootout if you've left your guns at home. The markets are no place

    to be trying to impress people. The only way to impress anybody is to stay on your

    toes, be consistent, and trade within your means. Marty Schwartz

    1059

    When you're trading, it's important to have your guns on. You can't be wandering

    around the Street unarmed, and if you don't know the terrain, you're going to getkilled. Marty Schwartz

    1058

    A great trader is like a great athlete. You have to have natural skills, but you have

    to train yourself how to use them. Marty Schwartz

    1057

    You will never be more objective than before you execute a trade. Once you are in

    a trade, emotions take over, so your plan must be in place beforehand. Marty Schwartz

    1056

    Trading must be addressed as a profession, because if you do not treat it as such,

    those who do will separate you from your money very quickly. Marty Schwartz

    1055 I went to a fight the other day and wound up trading futures in Chicago. Wall Street proverb

    1054

    The more you lose in a trade, the less objective you become. Exiting a losing trade

    quickly clears your head and restores your objectivity. After a breather, you might

    put the same trade back on if you can intellectually justify it, but you have toconstantly remind yourself that there's a myriad of opportunities in the

    marketplace. By preserving your capital through the use of a stop, you make it

    possible to wait patiently for a high-probability trade with a low-risk entry point. Marty Schwartz

    1053

    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. Marty Schwartz

    1052

    Whenever you have jealousy as an emotion, or greed, or envy, it distorts your

     judgment. The market's like the bleached blonde in Vegas. It doesn't care about

    you. That's why you have to put aside your ego and get out. If you have trouble

    doing that, as most people do, be like Odysseus; tie yourself to the mast with an

    automatic stop and take your emotions out of play. Marty Schwartz

    1051

    What most people fail to understand is that while you're losing your money, you're

    also losing your objectivity. It's like being at the craps table in Vegas, and the fat

    bleached blonde in the sequined dress is rolling the dice, and you're losing, and

    you're determined that you're not going to let her beat you. What you've forgotten

    is that she doesn't care about you, she's just rolling the dice. Marty Schwartz

    1050

    Taking a loss is hard to do because it's an admission that you've been wrong. But

    in the market, being wrong some of the time is part of the game. On each trade,

    you have to establish your 'uncle point,' the point where you'll get out of a losing

    position, and you have to have the mental discipline to pull the trigger at that point. Marty Schwartz

    1049 There's no cure for fools. Yojimbo

    1048Confidence is every part of trading. If you're not convinced that you can win, youshould never climb into the ring. Marty Schwartz

    1047

    For two hundred days a year, I'd end up with reasonably small losses netted out

    with similar-sized gains. Lose $5,000 here, make $6,000 there, round after round,

    twenty, thirty, forty times a day. But I'd win the other fifty trading days by clear-cut

    unanimous decisions. Smack the bonds for $75,000, hit a stock for $100,000, nail

    a couple of options for $125,000, pound the S&Ps for $150,000. Over time it made

    me a big winner, to the tune of $5 million a year. Marty Schwartz

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    1046

    The most important thing is to protect your trading capital until you can regain your

    equilibrium and put all the shadows of the losing streak behind you. Losing streaks

    are an unfortunate part of the game, but if you are a good disciplined trader who

    can shift into neutral, the losing will end and black ink will start to flow again. Marty Schwartz

    1045

    When I came back, I'd see a trade I liked and I'd do it small with a very tight stop,

    so if I was wrong, I'd get right out. All the time I kept telling myself, make littleprofits, make little profits, make little profits. Black ink, black ink, black ink. It's all

    psychological. Marty Schwartz

    1044

    You can never shift from reverse to first gear without going through neutral. You

    must change the direction of bad trading by first shifting to neutral. You must stop. Marty Schwartz

    1043

    The best way to stop a losing streak is to stop! Stop the losses, stop the bleeding.

    Take time off and let your intellect take charge of your emotions; the market will be

    there when you return. Marty Schwartz

    1042

    The best way to end a losing streak is to cut your losses and divorce your ego from

    the game... You have to manage your resources and not lose too much of your

    stake. Many people when they're losing increase their bets; they double up hopingto win it all back on one roll of the dice. That strategy can be devastating. Marty Schwartz

    1041

    When you're a market timer, you have to be equally good at going short and going

    long, and when the market changes sides, you can't hold your position and hope itturns around. If you're not a natural like Mickey Mantle, you've got to be a student

    of the game like Rod Carew. Practice, practice, practice. Marty Schwartz

    1040

    Because we make and lose thousands of dollars every day, big-time traders often

    give the appearance of treating money with an 'easy come, easy go' attitude.

    That's not right. Just because we don't do the mashed potatoes over our wins or

    whine about our losses doesn't mean that we take them casually. Marty Schwartz

    1039

    When you're trading real time, and things start popping, you're challenged to make

    immediate decisions. You can't stand still, there's no time to think. It's attack or

    retreat, increase the position or get out. Marty Schwartz

    1038

    That's the basic difference between an investor and a trader. A trader looks at the

    market as one living, breathing organism instead of a collection of individual

    stocks. Marty Schwartz

    1037

    The only real security that a man will have in this world is a reserve of knowledge,

    experience, and ability. Henry Ford

    1036

    I've found that people who are great at something are not so much convinced of

    their own greatness as mystified at why everyone else seems so incompetent. Paul Graham

    1034

    Academic assertions that outperformance is impossible pose a useful sort of litmus

    test. If one is cowed enough by the dogma to accept mediocrity as inevitable, then

    one most likely lacks the drive, the talent or the intellect (or some combination of

    the three) to achieve excellence in the first place. Jack Sparrow

    1033 Develop a built-in bullshit detector. Ernest Hemingway1032 Never mistake motion for action. Ernest Hemingway

    1031 There is great disorder under heaven... the situation is excellent. Chairman Mao

    1030

    For the great majority of mankind are satisfied with appearances, as though they

    were realities. Niccolo Machiavelli

    1029

    The enemy advances, we retreat; the enemy camps, we harass; the enemy tires,

    we attack; the enemy retreats, we pursue. Chairman Mao

    1028

    The realization that you are responsible for the results you get is the key to

    successful investing. Winners know they are responsible for their results; losers

    think they are not. Van Tharp

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    1027

    I'm not saying that controlling your mental state is the magic solution to trading

    success. It's just part of the answer. But when you admit that the answer is within

    yourself, you've come a long way. Van Tharp

    1026

    Always respect the marketplace. Never take anything for granted. Do your

    homework. Recap the day. Figure out what you did right and what you did wrong.

    That is one part of the homework; the other part is projective. What do I want tohappen tomorrow? What happens if the opposite occurs? What happens if nothing

    happens? Think through all the 'what-ifs.' Anticipate and plan, rather than react. Tony Saliba

    1025

    Discipline is number one: Take a theory and stick with it. But you also have to be

    open-minded enough to switch tracks if you feel that your theory has been proven

    wrong. You have to be able to say, 'My method worked for this type of market, but

    we are not in that type of market anymore.' Tony Saliba

    1024

    How do you lose money? It's either a bad day trading or a losing position. If it's a

    bad position that is the problem, then you should just get out of it. Tony Saliba

    1023

    ...the best traders have no ego. To be a great trader, you have to have a big

    enough ego only in the sense that you have confidence in yourself. 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

    1022

    Trading is like any other job. You work hard, put in the time and effort, and make

    your own luck. I was lucky that the first 100-lot I sold was a winner. But why was Ilucky? Because I stood there all day for over six months, developing and honing

    market feeling. When the opportunity occurred, I didn't hesitate. Tom Baldwin

    1021

    Most important, losers don't work hard enough. Most people walk in and think

    there is a 50/50 chance on any trade. They don't think there is anything more to it

    than that. They don't concentrate. They don't watch the factors that affect the

    market. You can see it in their eyes; it is almost as if there is a wall in front of their

    face. Tom Baldwin

    1020 I'm not afraid to lose. When you start being afraid to lose, you're finished. Brian Gelber

    1019

    Most traders who fail have large egos and can't admit that they are wrong. Even

    those who are willing to admit that they are wrong early in their career can't admit it

    later on. Also, some traders fail because they are too worried about losing. Brian Gelber

    1018

    I'm not picky about how I make my money. It doesn't matter if my opinion is right or

    wrong. All that matters is whether I make money. Brian Gelber

    1017

    I know educated people who watch the news and wonder why the hell they lost

    money when everyone else is taking profits. The media owes it to the public to

    report that the market goes down not only on profit taking, but on a lot of loss

    taking as well. Mark Weinstein

    1016

    You have to learn how to lose; it is more important than learning how to win. If you

    think you are always going to be a winner, when you lose, you will develop feelings

    of hostility and end up blaming the market instead of trying to learn why you lost. Mark Weinstein

    1015

    Your strategy has to be flexible enough to change when the environment changes.

    The mistake most people make is they keep the same strategy all the time. They

    say, 'Damn, the market didn't behave the way I thought it would.' Why should it?

    Life and the markets just don't work that way. Mark Weinstein

    1014

    Don't trade until an opportunity presents itself. Knowing when to stay out of the

    markets is as important as knowing when to be in them. Mark Weinstein

    1013 Be your own person. Think against the herd, as they must lose in time. Mark Weinstein

    1012

    Don't be arrogant. When you get arrogant, you forsake risk control. The best

    traders are the most humble. Mark Weinstein

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    1011

    Another item I would place under the category of misconceptions is the way the

    media reports the reasons for the market being down. They are always saying the

    market is down because of profit taking. I think it would be wonderful if everybody

    was always taking profits. But, the truth is, most people lose money, and the

    reason markets go down is because they take their losses. Mark Weinstein

    1010

    I don't try to figure out where the market is going before the action; I let the markettell me where it is going. Also, there is such a variety of technical input in the stock

    market... that you will almost always get a signal before the market is about to do

    something. Mark Weinstein

    1009

    I am always looking for a market that is losing momentum, and then go the other

    way. Mark Weinstein

    1008

    When I trade at home, I often watch the sparrows in my garden. When I feed them

    bread, they take just a little piece at a time and fly away. They keep on flying back

    and forth, taking small bits of bread. They may have to make a hundred stabs at a

    piece of bread to get what a pigeon gets at one time, but that is why a pigeon is a

    pigeon. You will never be able to shoot a sparrow, it is just too fast. Mark Weinstein

    1007

    Although the cheetah is the fastest animal in the world and can catch any animalon the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in

    the bush for a week, waiting for just the right moment. It will wait for a baby

    antelope, and not just any baby antelope, but preferably one that is also sick orlame. Only then, when there is no chance it can lose its prey, does it attack. That,

    to me, is the epitome of professional trading. Mark Weinstein

    1006

    Most people will not wait for the environment to tip itself off. They will walk into the

    forest when it is still dark, while I wait until it gets light. Mark Weinstein

    1005

    My fear of the markets has forced me to hone my timing with great precision.

    When I am trading properly, it is like a pool player running racks. If my gut feel of

    market conditions is not right, I don't trade. Mark Weinstein

    1004

    I just wait until there is money lying in the corner, and all I have to do is go over

    there and pick it up. I do nothing in the meantime. Even people who lose money in

    the market say, 'I just lost my money, now I have to do something to make it back.'

    No, you don't. You should sit there until you find something. Jim Rogers

    1003

    I always try to encourage people that are thinking of going into this business for

    themselves. I tell them, 'Think that you might become more successful than you

    ever dreamt, because that's what happened to me.' Marty Schwartz

    1002

    I always take my losses quickly. That is probably the key to my success. You can

    always put the trade back on, but if you go flat, you see things differently. Marty Schwartz

    1001

    If you're ever very nervous about a position overnight, and especially over a

    weekend, and you're able to get out at a much better price than you thought

    possible when the market trades, you're usually better off staying with the position. Marty Schwartz

    1000

    The most important thing is money management, money management, money

    management. Anybody who is successful will tell you the same thing. Marty Schwartz

    999

    The great thing about being a trader is that you can always do a much better job.

    No matter how successful you are, you know how many times you screw up. Most

    people, in most careers, are busy trying to cover up their mistakes. As a trader,

    you are forced to confront your mistakes because the numbers don't lie. Marty Schwartz

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    998

    After a devastating loss, I always play very small and try to get black ink, black ink.

    It's not how much money I make, but just getting my rhythm and confidence back. I

    shrink my size totally — to a fifth or a tenth of the position that I trade normally.

    And it works. I think I ended up losing only $57,000 in November 1982, after taking

    a $600,000 hit on November 4. Marty Schwartz

    997

    By living the philosophy that my winners are always in front of me, it is not so

    painful to take a loss. If I make a mistake, so what! Marty Schwartz

    996

    Before, admitting I was wrong was more upsetting than losing the money. I used to

    try to will things to happen. I figured it out, therefore it can't be wrong. When I

    became a winner, I said, 'I figured it out, but if I'm wrong, I'm getting the hell out,

    because I want to save my money and go on to the next trade. Marty Schwartz

    995

    My attitude is that I always want to be better prepared than someone I'm

    competing against. The way I prepare myself is by doing my work each night. Marty Schwartz

    994

    If you try to learn from every single trade that you make, you are only going to get

    better and better as time goes on. David Ryan

    993

    In physics you're playing against God, and he doesn't change his laws very often.

    In finance you're playing against God's creatures, agents who value assets based

    on their ephemeral opinions. They don't know when they've lost, so they keeptrying. Emanuel Derman

    992 You need to be decisive, open-minded, flexible and competitive. Stan Druckenmiller

    991 You miss 100% of the shots you don't take. Wayne Gretzky

    990

    The highest compliment that you can pay me is to say that I work hard every day,

    that I never dog it. Wayne Gretzky

    989 I skate to where the puck is going to be, not where it has been. Wayne Gretzky

    988

    The stock market is neither efficient nor random. It is not efficient because there

    are too many poorly conceived opinions; it is not random because strong investor

    emotions can create trends. William O' Neill

    987

    High volume at a key point is an extraordinarily valuable tip-off that a stock is ready

    to move. Volume can also be used in a reverse manner. When prices enter a

    consolidation after an advance, volume should dry up very substantially. In other

    words, there should be very little selling coming into the market. During a

    consolidation, declining volume is generally constructive. William O' Neill

    986

    Just as a doctor would be foolish not to use X-rays and EKGs, investors would be

    foolish not to use charts. Charts provide valuable information about what is going

    on that cannot be obtained easily any other way. They allow you to follow a huge

    number of different stocks in an organized manner. William O' Neill

    985

    Letting losses run is the most serious mistake made by most investors. The public

    doesn't really understand the philosophy of cutting losses quickly. William O' Neill

    984

    The secret for winning in the stock market does not include being right all the time.

    In fact, you should be able to win even if you are right only half the time. The key is

    to lose the least amount of money possible when you are wrong. William O' Neill

    983

    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' Neill

    982

    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

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    969

    [Poker is] a very simple game; a five-year-old can learn it. But it's also highly

    mathematical. If you never play someone on the next level, you don’t even know

    that level exists. It's almost another dimension. Chip Reese

    968

    I have two basic rules about winning in trading as well as in life: (1) If you don't bet,

    you can't win. (2) If you lose all your chips, you can't bet. Larry Hite

    967

    When I was a kid and got my first motorcycle, I had an older friend who would

    always get into fights. He told me, 'Larry, when you are on a motorcycle, neverargue with a car. You will lose.' The same lesson applies to trading: If you argue

    with the market, you will lose. Larry Hite

    966

    There are really four kinds of trades or bets: good bets, bad bets, winning bets,

    and losing bets. Most people think that a losing trade was a bad bet. That is

    absolutely wrong. You can lose money even on a good bet. If the odds on a bet

    are 50/50 and the payoff is $2 versus a $1 risk, that is a good bet even if you lose.

    The important point is that if you do enough of those trades or bets, eventually you

    have to come out ahead. Larry Hite

    965

    Risk is a no-fooling-around game; it does not allow for mistakes. If you do not

    manage the risk, eventually they will carry you out. Larry Hite

    964

    I have a friend who has amassed a fortune in excess of $100 million. He taught me

    two basic lessons. First, if you never bet your lifestyle, from a trading standpoint,nothing bad will ever happen to you. Second, if you know what the worst possible

    outcome is, it gives you tremendous freedom. The truth is that, while you can't

    quantify reward, you can quantify risk. Larry Hite

    963

    There is a very important message here: People don't change. That is why this

    whole game works. Larry Hite

    962

    I have a friend who is an economist. He would try to explain to me, as if talking to a

    child, why what I was trying to do was futile, because 'the markets are efficient.' I

    have noticed that everyone who has ever told me that the markets are efficient is

    poor. Larry Hite

    961

    For some reason, the idea of trading on 5 percent margin made perfect sense to

    me. Larry Hite

    960

    I know several people who claim to have market insights during dreams. I think

    one of the functions of dreams is to reconcile information and feelings which the

    conscious mind finds intractable. Ed Seykota

    959

    It is a happy coincidence that when nature gives us true burning desires, she also

    gives us the means to satisfy them. Those who want to win and lack skill can get

    someone with skill to help them. Ed Seykota

    958

    It's not how close you get to the ground, but how precise can you fly the airplane. If

    you feel so careless with your life that you want to be the world's lowest flying

    aviator, then you might do it for a while — but then a great many former friends of

    mine are no longer with us, simply because they cut their margins too close. Bob Hoover

    957 There are few activities so enlightening as to read old books with new eyes. Jack Sparrow

    956

    Trading is a curious mix of mostly going with the flow, yet knowing when to

    selectively fade the flow. Jack Sparrow955 Being contrarian at the wrong time is akin to arguing with a herd of cattle. Jack Sparrow

    954

    I think that if people look deeply enough into their trading patterns, they find that,

    on balance, including all their goals, they are really getting what they want, even

    though they may not understand it or want to admit it. Ed Seykota

    953

    Win or lose, everybody gets what they want out of the market. Some people like to

    lose, so they win by losing money. Ed Seykota

    952

    Psychology motivates the quality of analysis and puts it to use. Psychology is the

    driver and analysis is the road map. Ed Seykota

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    951

    A losing trader can do little to transform himself into a winning trader. A losing

    trader is not going to want to transform himself. That's the kind of thing winning

    traders do. Ed Seykota

    950

    [Traders fail] for the same reason that most baby turtles fail to reach maturity:

    Many are called and few are chosen. Society works by the attraction of the many.

    As they are culled out, the good ones are left, and the others are released to go try

    something else until they find their calling. The same is true for other fields ofpursuit. Ed Seykota

    949

    One alternative [to expensive drama] is to keep bets small and then to

    systematically keep reducing risk during equity drawdowns. That way you

    approach your safe money asymptotically and have a gentle emotional and

    financial touchdown. Ed Seykota

    948

    The joy of winning and the pain of losing are right up there with the pain of winning

    and the joy of losing. Also to consider are the joy and pain of not participating. The

    relative strengths of these feelings tend to increase with the distance of the trader

    from his commitment to being a trader. Ed Seykota

    947

    'Luck' or 'smarts' or 'gift' are words indicating an attitudinal proclivity for mastery.

    One tends to do well at one's calling. I think most good traders have a little extra

    spark about trading. Ed Seykota

    946

    Luck plays an enormous role in trading success. Some people were lucky enough

    to be born smart, while others were even smarter and got born lucky. Ed Seykota

    945

    Good traders have a special talent for trading just as good musicians and goodathletes have talents for their fields. Great traders are ones who are absorbed by

    the talent. They don't have the talent — the talent has them. Ed Seykota

    944

    Gold tends to be dug up, refined, and then buried again. The geographical entropy