INSPIRATIONAL FOREX QUOTES FROM THE WORLDS BEST TRADERS
Inspirational Forex Quotes From The World’s Best Traders
There comes a point in every forex trading career, or even every trading week or day, when you need that little bit of extra inspiration. There is always someone who has been through your situation before and lived to tell the tale, and who better to turn to than some of the most successful and admired traders of all time?
Here are some of the best quotes from some of the world’s most profitable traders to give you a motivational boost on a bad day!
Let’s start with the best before we get to the rest…Warren Buffett is the ultimate high net worth trader with a personal fortune of over $110bn, making him the fifth richest person in the world. He is CEO of Berkshire Hathaway, a leading US financial holding company, and he has a long history of making successful investments and business decisions.
Besides all this, he has philanthropic beliefs and has already donated billions of dollars to charities. In 2006, he stated his intention to give 83% of his fortune to the Bill & Melinda Gates Foundation. Seems like a guy worth listening to! Some people even call him the ‘Oracle of Omaha’ (Buffett was born in Omaha, Nebraska, in 1930).
Without further ado, let’s examine his well informed, wise and witty advice.
“The most important quality for an investor is temperament, not intellect.”
This quote should be inscribed above the door of every forex trader’s office, or at least written on a post-it note and permanently left stuck to their laptop.
It is a pithy summary of what all books about forex trading psychology are trying to say: That most trading errors are not made through ignorance, but because the trader allowed their emotions to influence their decision making process.
New traders may feel dismissive of talk about psychology and emotions: after all, most of us like to think of ourselves as rational human beings who are capable of thinking objectively, especially when it comes to our professional lives and career.
The problem is that trading is very difficult to separate from the aspects of life that concern us most deeply: when we place a trade, we are taking a controlled risk with our financial security and this affects our very basic needs for survival, such as food, shelter, and warmth.
When these needs are under threat, primal human emotions come into play, including fear, greed, anxiety, and impatience. No one is immune to these feelings and they can subconsciously influence our decision making, usually for the worse.
Fear can lead us to close a trade before the target price is achieved, greed can lead us to trade even when there are no good opportunities or reasons to do so, and anger or anxiety can lead us to ‘revenge trade’ to try and compensate for a previous loss.
The wise trader is someone who is constantly checking in on their emotional state and imposing a system of checks and balances before every move. They have patience and discipline, and as Buffett states, this is more valuable than technical ability. As he also says: “The market is a device for transferring money from the impatient to the patient.”
Let us graze further from the Buffett banquet table: “Risk Comes From Not Knowing What You’re Doing”.
This quote might appear to contradict the first one, but it doesn’t mean that you need to know or understand everything about forex; it means that you need to research those areas that affect the currency pairs and trading strategies that you are working with. Forex trading is all about minimising risk, and knowledge helps you to do this.
Keep up to date with the economic news, and with geopolitical events that affect the market price of your currency pairs. Review your trading journal on a regular basis to identify what is working best about your trading strategy and what might need adjustment. Master some technical analysis tools and find out which ones work best for you.
Learning about forex is a constant process and you need to stay ahead of the game. Even when you have had a run of successful trades, it can be very dangerous to sit back and assume you have hit on a winning formula. There is really no such thing in forex trading, so never be lulled into a false sense of security or you will soon be taking unmanaged risks.
One final quote from the Buffinator before we move on: “Never depend on a single income. Make an investment to create a second source.”
There are two strands of wisdom forex traders can take from the above quote. The first is especially important for newcomers who are considering trying to make a living from forex trading. If you have quit your job in the hope of being your own boss and free from the pain of the 9-5, then you have almost certainly put too much pressure on yourself.
Inexperienced traders should use a demo account for at least two or three months before they start trading live, to get acquainted with the trading platform and to test drive their trading strategy. Even then, it is likely to be at least 12 months before you start making a steady profit as a forex trader.
Therefore, it is highly recommended that you have a second income stream to cover your basic living expenses while you gain confidence in your trading ability. It can be a rollercoaster ride, and it will be much easier if you are not also trying to make a living from trading.
Many people fit trading in around a part time or even a full time job. The forex markets are highly liquid and operate almost 24/7. The peak trading hours between London and New York occur before 9:00 GMT and after 16:00 hours, so it is relatively easy to trade before or after your normal working day.
Having a second income to support you will also help you maintain good mental health and stop you from being pushed into emotion-led trading decisions based on fear, anxiety, or greed, as we have already discussed.
The second point to take from Buffett’s quote is more pertinent to forex traders who have some experience under their belt and are making steady profits. It’s about getting the best value from your hard won money, and choosing to invest it wisely so that it can earn you a second passive income.
This means that you will eventually reap twice as much reward from your efforts, and in the long run this will benefit you more than a load of designer clothes or a succession of overseas holidays.
Let’s move on to more words from the wise. Alexander Elder was born in Russia and trained as a psychiatrist. He moved to New York where he worked in medical practice before moving on to become a successful financial trader. As you might have already guessed, his background in psychology provided him with insight into the financial world.
Here is one of his most famous quotes: “The goal of a successful trader is to make the best trades. Money is secondary.”
This is a really important point for new traders to understand, especially if you have set high profit goals for yourself. Good traders have mental and emotional discipline, a thirst for knowledge, and are highly focused. Developing these traits will help you to make the best trading decisions, and in time steady profits will follow.
If you are simply in it for the money, you will soon lose the willpower and motivation to carry on. The key is to enjoy the journey, rather than fret about the final destination.
One final quote from Elder to finish on: “You have to identify your weaknesses and work to change. Keep a trading diary – write down your reasons for entering and exiting every trade. Look for repetitive patterns of success and failure.”
We’ve said it before and no doubt we’ll say it many times over again: Keep a trading journal. If it worked for Alexander Elder, then it can work for you too. Your journal should be more than just a record of which trades you made and when. It should be an integral part of your planning process, so that you can review your past performance at a glance.
Note down key performance indicators such as total profit or loss, monthly average return percentage, and eventually your annualised return and net gain, together with your overall success rate. It is also helpful to keep a watchlist of potential trading opportunities that are most likely to suit your trading strategy.
As well as these factual details, try adding a retrospective summary of each trade, and reflect on what you think you did well and what you need to improve. This can help you identify unhelpful patterns of behaviour, because we all have a natural tendency to repeat mistakes.
Of course you can also look at your most successful trades to see if you can identify a pattern. Over time, your journal will become an essential part of your trading toolkit.
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