Psychology
“To avoid whipsaw losses, stop trading.”
“It can be very expensive to try to convince the markets you are right.”
“A fish at one with the water sees nothing between himself and his prey. A trader at one with his feelings feels nothing between himself and executing his method.”
Risk Management
“The elements of good trading are cutting losses, cutting losses, and cutting losses.”
“Here’s the essence of risk management: Risk no more than you can afford to lose, and also risk enough so that a win is meaningful. If there is no such amount, don’t play.”
“In your recipe for success, don’t forget commitment – and a deep belief in the inevitability of your success.”
Trading System
“The trend is your friend except at the end when it bends.”
“If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it’s coming in, it’ll never happen. The market is always right.”
“Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible.”
“I don’t predict a nonexisting future.”
Ed Seykota is a legend in the trend following community and has returns that would make Bernie Madoff jealous, because his are real. If you can fully grasp what Ed is saying in these quotes it will improve your trading dramatically.
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