Introduction: How to cultivate top traders?
How do top traders think and summarize their trading strategies?
Marty Schwartz
Champion trader, in the first decade of trading, often suffered losses and was on the brink of bankruptcy for a long time. After 1979, he became a top trader. He has participated in the four month trading competition of the National Investment Competition 10 times in total, winning 9 championships with an average investment return rate of 210%. The money he earned is almost the sum of the other participants. He believes that the most important trading principle is fund management.
Viewpoint 1: If I’m wrong, I have to get out quickly. As the saying goes, keep the green mountains and don’t be afraid of running out of firewood. I must maintain my strength and make a comeback.
Viewpoint 2: No matter when you encounter setbacks, you will feel very uncomfortable in your heart. Most traders, when suffering significant losses, always hope to immediately recover, so they keep getting bigger and bigger, hoping to reverse their disadvantage in one fell swoop. But once you do this, it means you are destined to fail. After I suffered that blow, I immediately reduced my operations. What I did at that time was not about how much money to make up for the losses, but about regaining my confidence in trading.
Viewpoint 3: Anyone who engages in trading will experience a period of sustained profitability. For example, I can make profits for 12 consecutive days, but in the end, I will feel very tired. Therefore, I will immediately reduce my operations after continuous or significant profits. The reason for encountering losses is usually due to not stopping after taking profits.
Michael Markus
A genius trader, between 1969 and 1973, often lost all his money in a formula of borrowing, losing, borrowing, and losing. After 1973, he began to embark on a successful trading path. In August 1974, he joined a commodity company as a trader and was given $30000 as a trading fund. About ten years later, the fund’s return rate was about 2500 times, expanding to $80 million. He believes that the most important aspect of trading is patience.
Viewpoint 1: The main reason why I keep losing money and losing everything is that I lack patience, which leads to ignoring trading principles and not being able to enter the market rashly when the situation becomes clear.
Viewpoint 2: There are fewer and fewer trading opportunities that meet the profit principle today, so you must be patient and wait. Whenever the market trend is completely opposite to my prediction, I will say: I originally hoped to make a big profit during this market trend, but the market trend is not as expected, so I decided to withdraw.
Viewpoint 3: You must stick to the good cards in your hand and reduce the bad cards. If you cannot stick to the good cards in your hand, how can you make up for the losses caused by the bad cards? There are many pretty good traders who end up giving up all the money they earn because they are unwilling to stop trading when they lose money. When I lose money, I say to myself: you can’t continue trading, wait for clearer market conditions. When you get a good card, you need to have patience to hold it, otherwise you will never be able to make up for the money you lost by getting a bad card.
Tom Baldwin
The most important thing in trading is patience.
Viewpoint 1: The most common mistake many traders make is trading too frequently. They won’t carefully choose the appropriate trading timing. When they see market fluctuations, they want to enter the market for trading, which is tantamount to forcing themselves to engage in trading instead of patiently waiting for trading opportunities in a proactive position.
Viewpoint 2: The reason why we are able to profit is because we have patiently done a lot of work before entering the market. Once many people make a profit, they become complacent about trading and start to operate more frequently. The next few losses will make it difficult for them to cope, resulting in huge losses and even losing their old capital.
Bruce Kovanna
A foreign exchange trader who spans the globe. From 1978 to 1988, the average annual return rate was 87%, which means that if you invested $2000 in his fund, your investment could grow to $2 million in 10 years. He believes that the most important aspect of trading is risk control.
Viewpoint 1: Whenever I enter, I always set a stop loss point in advance, which is the only way for me to sleep peacefully. I always avoid setting the stop loss point at a price that the market situation may easily reach. If you analyze correctly, the market situation will never return to the stop loss level. If the market reaches the stop loss point, it means that the transaction has made a mistake.
Viewpoint 2: My worst deal was made on impulse. Based on my trading experience, the most destructive mistake in trading is excessive impulsiveness. Anyone who makes a trade should follow established trading signals and never change their trading strategy hastily due to a momentary impulse. Therefore, not being impulsive is the top priority in risk control.
Viewpoint 3: I want to emphasize that in trading, one must learn to control risks and prepare for the worst. Therefore, one must operate in small quantities and keep the loss of each transaction between 1% and 2% of the funds.
Richard Dennis
A legendary figure in commodity trading. I entered the commodity trading industry in the late 1960s and in the first few years, I often lost all my money. After 1970, he began his journey towards success and over the course of 20 years, he turned $400 into a fortune of approximately $200 million. The founder of Turtle Trading Law. He believes that the most important thing in trading is calmness.
Viewpoint 1: I have been engaged in trading for more than 20 years. If I hadn’t learned to stay calm earlier, I would have been driven crazy by the ups and downs of my trading career. Traders are like boxers, the market can strike you hard at any time, and you must remain calm. When you suffer losses, it means the situation is not favorable for you. Don’t worry, take it slow. You must minimize the losses and protect your capital as much as possible. When you suffer significant losses, your emotions will inevitably be greatly affected. You must reduce your business and consider the next transaction after a period of time.
Viewpoint 2: Whether I suffer big losses or make big profits, I will maintain a calm mind and analyze every transaction every day to see if any violations have occurred. For good trades, think carefully about why they succeed, and for bad trades, self reflect and identify the root cause. Therefore, in order to always do well, you must pay great attention to every transaction you make in your daily life.
Viewpoint 3: Almost everyone can list 80% of the trading rules we teach, but they cannot tell people how to firmly adhere to these rules when the market is unstable. Therefore, calmly executing trading rules should allow you to grasp most of the market trends outside of history.
Mark Weinstein
I used to work as a real estate agent, but later became a trader. In the first four years, losing money was like losing money, repeatedly losing everything and saving money again and again. After more than 4 years of failure, he began to embark on the path of success and maintained a high profit margin. A source familiar with the matter revealed that he had watched 100 of his trading records, only a few of which were losses. He believes that the most important thing in trading is to always be cautious.
Viewpoint 1: Why am I able to achieve such a high profit margin? That’s because I’m afraid of the market’s unpredictable changes. I’ve found that successful traders are usually people who fear the market. The fear of market trading requires me to carefully choose the timing of my entry. Most people don’t wait until the market is clear before entering. They always enter the forest at night, while I always wait until dawn to enter. I don’t predict the direction of market changes before they start, I always let market changes tell me the direction of market changes. Choosing and waiting for a foolproof opportunity before launching an attack, otherwise I have to give up. This is my most important trading principle.
Viewpoint 2: Don’t be blinded by the joy of profit. You should know that the most difficult thing in the world is how to sustain profits. Once you make money, you will want to continue making more money. In this way, you will forget the risks and not doubt the correctness of your established trading principles, which is the reason for self destruction. Therefore, you must always be cautious, be very cautious when losing money, and be even more cautious when making money.
Viewpoint 3: Trading strategies need to be flexible to reflect market changes in order to demonstrate a highly cautious approach to combat. The most common mistake most traders make is that their trading strategies are always the same. They often say, “his mother, why is the market totally different from what I think?” 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 highly likely that you have encountered a volatile market or a trend change. At this time, how can you continue to operate in this trend? Therefore, at this point, you must be very cautious and wait for things to become clearer, rather than rashly continuing to operate.
Paul Tudor Jones
The art of aggressive operation. In September 1984, Jones founded the DuDe Futures Fund for $1.5 million, and by October 1988, the fund had grown to $330 million. He has a dual personality and is quite easy-going in social situations. He is an approachable, humble and polite gentleman; When trading, giving orders seems like a fierce and brutal officer. He believes that the most important aspects of trading are self-restraint and fund management.
Viewpoint 1: When I lost 70% of my funds in one go, I decided to learn self-restraint and fund management. When operating, I try to relax as much as possible. If the holding position is unfavorable to me, I will step forward, and if it is favorable to me, I will hold on.
My current mindset is how to reduce losses, not how to make more money. Therefore, when your trading situation is poor, reduce or stop operations. When trading enters a good period, increase operations. Do not enter the trading market rashly without your control.
Viewpoint 2: Whenever I make a transaction, I always feel anxious because I know that success comes and goes quickly in this field. Every time I suffer a blow, it’s always when I feel proud. The speed at which anything is destroyed is much faster than the time it took to build it. Some things take ten years to build, but they can be completely destroyed in a day. Therefore, no matter when, I will strictly restrain myself.
Viewpoint 3: My biggest weakness is being overly optimistic. Therefore, when I operate now, I never think about how much money each transaction can earn me, but always think about the possible losses and pay attention to protecting what I already have.
Eddy Sekuta
A genius trader, Secota used computer trading systems to operate for clients and himself. Between 1972 and 1988, the investment return rate he achieved was almost unbelievable. For example, one of his clients invested $5000, and by 1988, the funds had grown to $12.5 million. He believes that the most important thing in trading is to be willing to change oneself, otherwise you will never succeed.
Viewpoint 1: I believe that trading and psychology are actually two sides of the same coin. The financial market is a good place to test individual psychological barriers. What happens to oneself must be a reflection of one’s own mentality. Failed traders find it difficult to transform into successful traders because they simply do not want to change themselves. In the depths of every loser’s heart, there is actually a subconscious desire to lose. Therefore, even if one achieves success, they will unconsciously destroy the fruits of victory. Everyone can achieve their dreams in the market.
Viewpoint 2: When trading, one should take the initiative to do a good job based on human flaws. For example, when I have poor operational skills and face losses, I will continuously reduce or even stop trading, rather than increasing trading emotionally, hoping to reverse the decline. This will definitely result in heavy losses, which is simply a self inflicted sin and cannot be lived.
Viewpoint 3: The vast majority of people have a gambling mentality when trading, preferring to enter and exit heavy positions. Therefore, you must change yourself in this regard. Throughout history, there has never been a guy who operates heavy warehouses and is not doomed. You must control every loss within 5%. Of course, within 2% is the best. Trading according to charts is like surfing. You don’t have to know the reason for the rise and fall of waves. As long as you can feel the rhythm of the waves and grasp the timing of surfing, you can become a surfing master.
Larry Hayter
Haide established Mingde Investment Management Company, and according to statistics, the company’s annual investment return rate always ranges from 13% to 60%. In April 1981, the company had only $2 million in funds, but by 2005, it had grown to $800 million. The biggest feature of this company is not to achieve the maximum investment return rate, but to maintain a sustained and stable growth in investment return rate through strict risk control. Haide believes that the most important thing in trading is to follow the trading system and risk control.
Viewpoint 1: Some people will change their trading system when they lose money, while others do not believe in the trading system at all, doubt the instructions issued by the trading system, and often enter and exit the market based on their own preferences. However, I always follow the trading system. I engage in trading not to provoke, but to achieve victory. Such trading may be quite boring, but it is quite effective. When I gather with other traders to discuss their thrilling trading experiences, I always remain silent because to me, every trade is the same.
Viewpoint 2: The first trading principle of Mingde Company is to absolutely follow the trend and fully trust the trading system. No one is allowed to violate the instructions issued by the trading system without authorization. That’s why the company has never had any failed transactions. In fact, there are four types of transactions: successful transactions, failed transactions, profitable transactions, and unprofitable transactions. A losing transaction does not necessarily mean a failed transaction, while a transaction that violates or does not comply with system trading instructions is definitely a failed transaction.
Viewpoint 3: The second trading principle of Mingde Company is to minimize risk, and the loss of each transaction must be controlled at around 1%. This is a very important matter. You must understand that the higher the risk of each transaction, the harder it is to control the results of the transaction. As long as you can control risks and follow the market trend, you will definitely make money. Usually, a trading system with a profit margin of 40% to 50% is considered good, but in times of market downturn, even if there are consecutive failures, the maximum loss caused will not exceed 10%. This is the benefit of controlling risk