Check out the following three trading gurus who share their experiences and you’ll understand.
First, Marty Schwartz.
A champion trader who started out trading for ten years, often losing money and long on the verge of bankruptcy, became a top trader after 1979. He entered the four-month trading competition program in the National Investment Awards a total of 10 times, winning nine times, with an average return on investment of 210%, and he made almost as much money as the other contestants combined. He believes the most important trading principle is money management.
Point 1: If I’m wrong, I have to get out of it quickly, and there’s a saying that if you’re left in the dust, you don’t fear the wood for the trees. I have to stay strong and make a comeback.View
Point 2: Whenever you suffer a setback, it’s hard on your mind. Most traders, when they suffer a major loss, always want to get back immediately, so they get bigger and bigger, trying to regain the disadvantage in one fell swoop. However, once you do that, you are doomed to failure. After I suffered that blow, I would immediately cut back and what I was doing was not about making as much money as I could to cover the loss, but about regaining my confidence in trading.
Point 3: Anyone who trades will have a good period of consistent profits, for example, I can make a profit for 12 days, but at the end I’m bound to get tired, so I’ll cut back as soon as I’ve made a profit or a big profit. Usually the reason for losses is that you don’t stop after you’ve made a profit.
Second. Michael Marcus
Genius Trader, who joined the commodities firm as a trader in August 1974, was given $30,000 as a trading fund, which expanded to $80 million about ten years later with a return of about twenty-five hundred times. He believes that one of the most important aspects of trading is having patience.
Point 1: The reason why I will continue to lose money and lose all of it, the main reason is that patience is not enough, so ignore the principle of trading, can not wait until the trend is clear, rashly enter the market.
Point 2: Today, in line with the profit principle of trading opportunities has become less and less, so you must wait patiently, whenever the market trend and my prediction is completely opposite, I will say: I had hoped to take advantage of this wave of the market to make a lot of money, but the market trend is not as expected, I simply quit.
Point 3: You must stick to the good cards in your hands and reduce the bad cards in your hands, if you can’t stick to the good cards in your hands, how can you make up for the losses caused by the bad cards? There are a lot of pretty good traders who end up spitting out all the money they made, and that’s because they don’t want to stop trading when they’re losing money.When I lose money I say to myself: you can’t keep trading, wait for a clearer market. And when you get a good hand, you have to be patient and hold it, otherwise you won’t be able to make up for the money you lose by getting a bad hand.
Third. Bruce Kovana
The average annual return from 1978 to 1988 was 87%, meaning that if you invested $2,000 in his fund, your investment could grow to $2 million in 10 years. He believes that the most important thing in trading is risk control.
Point 1: Whenever I enter a trade, I always set a stop loss point, it’s the only way I can sleep easy. I always avoid setting a stop at a price that the market could easily reach, and if you analyze it correctly, the market will never get back to the stop. If the market reaches the stop, then the trade was a mistake.
Point 2: One of my worst trades was an impulse trade. According to my trading experience, the most destructive mistake in trading is to be overly impulsive. Anyone who makes a trade should follow the established trading signals and never change their trading strategy on impulse. Therefore, don’t be impulsive is the first code of risk control.
Point 3: I would like to emphasize that to engage in trading you must learn to control the risk, you have to prepare for the worst, therefore, you must operate in small quantities and limit the loss of each trade to between 1% and 2% of the capital.