We are going to be taking a good look at secret trading insights from some of the best minds of the world. It is going to be a moment of understudying these great traders, their business principles and quotes also, we’ll see how we could incorporate what we’ll be learning into our trading experience subsequently.
One good way to learn is to learn from those who have experience; they could serve as mentors. This can be done by reading, studying or learning from them as much as possible and in whatever field of your choice.
The following are a few things to know about 10 of the world’s best traders, their quotes, my interpretation of them and how I apply it in my own business with the hope that you too can gather a few ideas from here and use to improve your trading business henceforth.
George Soros and his Secret Trading Insights
He is popularly known as “the man who broke the Bank of England” because he shorted the British pound and invested $10 billion in just one currency trade in September 1992. Although the risk he took made him infamous after all, his decision paid off as his investment realized a profit of $1 billion in just one day (reports even have it that his profit from that very transaction was close to $2 billion).
He founded Soros Fund Management in 1973 which is a hedge fund company that later became the famous Quantum Fund. He aggressively ran this company for about 20 years, and it was successfully bringing in returns yearly in excess of 30% as reported. Even on two occasions, the annual report posted was above 100%.
One of Soros’ popular quote states that “markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” I am particularly in love with this man Soros for this statement he made because he’s been able to describe my thoughts about the market and even some of my price action plans. With respect to “the obvious and betting on the unexpected” as he said, my fakey pattern and a false break strategy are designs that show how price action can be used.
What is generally observed among most market players is that they ignore the fact that market can on a dime switch bias and direction but they would rather stick with one bias of the market. So if you desire to be able to in the long run make money, it is important that you train your mind to be an adaptable trader and be ready for everything. As we can see that even when the whole world wouldn’t dare, Soros did and he received a huge reward. This example explains how that “going with the flow” is not always a guarantee of safety.
The famous Jesse Livermore who before the crash in 1929 sold short the U.S. stocks which landed him on his peak worth of $100 million which in today’s dollars and dependent on the kind of index used, would be between 1.5 -13 billion. He was one of the greatest traders of all times and author of the book “How to Trade in Stocks” (1940).
A famous quote made by Livermore says, “play the market only when all factors are in your favor. No person can play his market all the time and win. There are times when you should be completely out of the market, for emotional as well as economic reasons.” I like this quote because it actually suits my personality as I believe in taking a low-frequency trading approach, trading like a sniper and not as a machine gunner.
What he tries to explain by suggesting to play the market when the factors are favorable simply means trading with confluence such that one is not in the market all the time. This he says will be beneficial both to the mind and to the trading account – emotional and economic reasons. I’d even suggest as I strongly believe from my trading experience that most times one should be out of the market.
After being hired by a major brokerage firm as an analyst in the early 1970s, Seykota created a computerized trading system which was the first commercial-type used to manage the monies of clients in future markets. Over a 12 year period, he followed the trend and used a client’s account to trade with $5000 which turned into $15,000,000.
In his book, The Market Wizards, Jack D. Schwager quoted Ed Seykota who said “fundamentals that you read about are typically useless as the market has already discounted the price, and I call them ‘funny-metals.’ I am primarily a trend trader with touches of hunches based on about twenty years of experience. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading. Way down in a very distant fourth place are my fundamental ideas and, quite likely, on balance, they have cost me money.”
I totally agree with and even teach in courses some concepts from Seykota’s quote. While following trends, I utilize my gut feelings and would always suggest to a trader that asides education and screen time, one needs to develop his gut feelings. I’m equally in support of the chart pattern he mentioned as I believe he’s talking about price action pattern.
I would describe trading with confluence as ones ability to pick a good spot to buy and sell. This would be determined by one’s understanding of price actions and the changing stories on the chart. His idea about fundamental analysis also tallies with mine; since the market has discounted them in the price, I put small stock in the fundamentals. This simply means that the market variables are reflected by the price action. This price action will allow one properly analyze a market and find entry and exit points of high probability so; it won’t be needful to begin analyzing every single market variable that shows up.
In the year 2007, Paulson invested in credit default swaps to bet against mortgage-backed securities when he foresaw the subprime mortgage crisis thus shorting the US housing market. He realized personally from this trade alone a fortune of over $4 billion. This is sometimes regarded as the greatest trade in history, and he became world famous.
One of Paulson’s great quotes reads; many investors make the mistake of buying high and selling low while the exact opposite is the right strategy.
This quote talks about the tendency for most traders or investors to buy when a market is high because at this time it naturally looks and/or feels OK too, but, statistics have it that each time a market goes really up, soon it Pull’s back so this is the reason it is in most cases preferable to trade on market pullbacks. While shorting, the inverse works because one would not ordinarily want to sell when the market has really sold off as one may end up selling the bottom. So a trader would want to wait for the price to bounce back to a place of value or resistance then after a pullback, rejoin the trend by looking out for a sell from the price action.
Paul Tudor Jones
In 1986 he correctly predicted on his documentary that judging from chart patterns, the market would suffer an epic crash. Then in the fall of 1987, he greatly made a profit from the Black Monday crash during the percentage decline of the U.S. stock market which is the largest ever to happen. It was reported that Jones short futures by tripling his money and realized around $100 million on that trade when the Dow Jones Industrial Average fell to 22%. He traded so well such that while others were negatively affected, he realized a fortune and his money had really good continuous returns for years. His shorting of Black Monday was one of the most popular trades ever.
The Market Wizards featured one of Paul Tudor Jones’ quotes which is one of his secret trading insights and it really inspires me; “that was when I first decided I had to learn discipline and money management. It was a cathartic experience for me, in the sense that I went to the edge, questioned my very ability as a trader, and decided that I was not going to quit. I was determined to come back and fight. I decided that I was going to become very disciplined and businesslike about my trading.”
What he means in his secret trading insights is that there would always be a point in time when every trader would as regards money management make a big mistake and thereafter take a decision on what next to do. Is the trader going to continuously lose money by making poor decisions or would s/he finally get a grip on how the market works and do business well? It is important to focus early on money management because this is actually what would determine one’s success rate on this trade.
In the early 1970s, the Chicago born Dennis who was a commodities speculator borrowed $1,600 and in ten years was reported to have made $200 million. With his friend William Eckhardt they began the popular Turtle Traders where they taught people their rules and proved to them that if given the right training, anyone could succeed at trading.
One of his good quotes is “I’ve certainly done it – that makes counter-trend initiations. However, as a rule of thumb, I don’t think you should do it.”
As a popular, successful trend trader, he has in the above quote stated his opinion about counter-trend trading and this is how I feel about it too. Sometimes it might be needful, but most of the time not so counter-trending would actually need someone who is skilled to be successful in it. It is therefore important that every trader first of all masters the art of trading with the trend.
In 1988 he was hired by George Soros and they together “broke the Bank of England” in 1992 when they shorted the British pound sterling and made a profit of more than $1 billion.
Here’s a quote from him; “I’ve learned many things from him [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 above is one of the things Druckenmiller learned from his mentor George Soros. How that most traders get overly concerned about the number of winners they have compared to losers when ideally they should be more concerned about their overall risk/reward which will help them determine how much they make for every dollar risked.
The American Rogers is a brilliant investor, author, financial commentator and co-founder of Global Investment Partnership and Quantum Fund alongside George Soros.
Here’s one of his quotes that I’ve always liked. “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.”
In simple terms, what Rogers is trying to say by this one of his best secret trading insights is that one shouldn’t force a trade if there’s obviously none at the moment, there isn’t anything wrong with not doing anything when there isn’t anything to do. It’s better and wiser to save up capital for a solid opportunity once it comes up.
According to Blomberg in January 2018, the American billionaire investor and hedge fund manager Raymond Dalio was listed among the world’s 100 wealthiest people.
Let’s take a look at this deep quote said by him. “I believe that the biggest problem that humanity faces is an ego sensitivity to finding out whether one is right or wrong and identifying what one’s strengths and weaknesses are.”
His quote makes a lot of sense because, in trading, one having a sensitive ego isn’t a good thing because one is going to make some trading mistakes and if one becomes overly emotional about every mistake you might just get plunged into more and more trading mistakes. Also, being right or wrong is irrelevant in trading as one could be averagely wrong and still make money. Lastly, it is important to determine what one’s strengths and weaknesses are before one can achieve trading success because we all drag our personality baggage to the market.
Warren Buffet sharing the best secret trading insights
Warren is popularly christened as the “Oracle of Omaha” and one of the most successful investors of all time who also runs Berkshire Hathaway which owns more than 60 companies and has reportedly given out more than 99% of his fortune to charity to the tune of about $32 billion.
One of his quotes is “opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
In my opinion, this quote implies that high-probability trade signals don’t happen frequently so if one receives a good and obvious trade signal, you’ll need to maximize your gains and not to take an easy profit, by waiting patiently until you arrive at a setup that will rake in large wins. Say 1:3, 1:4 or even more.
For anyone who is yet struggling with trading successfully, it is important to first understand one’s self, make a correct account of your money. Learn from secret trading insights, be patient and disciplined before you should begin trading or risking real money in the markets.