Alexander Elder Quotes

“Most private traders on a losing streak keep trying to trade their way out of a hole. A loser thinks a successful trade is just around the corner, and that his luck is about to turn. He keeps putting on more trades and increases his size, all the while digging himself a deeper hole in the ice. The sensible thing to do would be to reduce your trading size and then stop and review your system.”

“The goal of a successful trader is to make the best trades. Money is secondary.”

“The mental baggage from childhood can prevent you from succeeding in the markets. 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.”

“When the market deviates from your analysis, you have to cut losses without fuss or emotions.”

“Amateurs look for challenges; professionals look for easy trades. Losers get high from the action; the pros look for the best odds.”

“Successful trading depends on the 3M`s - Mind, Method and Money. Beginners focus on analysis, but professionals operate in a three dimensional space. They are aware of trading psychology, their own feelings and the mass psychology of the markets. Each trader needs to have a method for choosing specific stocks, options or futures as well as firm rules for pulling the trigger - deciding when to buy and sell. Money refers to how you manage your trading capital.”

“Before we analyze charts and look for stocks to buy or sell, let’s explore several basic questions: what markets to trade, how to manage risk and why keep a trading journal.”

“A loser's true problem is not account size but overtrading and sloppy money management. He takes risks that are too big for his account size, however small or big. No matter how good his system may be, a streak of bad trades is sure to put him out of business.”

“An astute trader aims to enter the market during quiet times and take profits during wild times.”

“An intelligent businessman takes only risks that will not put him out of business, even if he makes several mistakes in a row.”

“Being simply 'better than average' is not good enough. You have to be head and shoulders above the crowd to win a minus-sum game.”

“It is hard enough to know what the market is going to do; if you don't know what you are going to do, the game is lost.”

“Markets need a fresh supply of losers just as builders of the ancient pyramids needed a fresh supply of slaves. Losers bring money into the markets, which is necessary for the prosperity of the trading industry.”

“People deceive and play games with themselves. Lying to others is bad, but lying to yourself is hopeless.”

“People trade for many reasons—some rational and many irrational. Trading offers an opportunity to make a lot of money in a hurry. Money symbolizes freedom to many people, even though they often don't know what to do with it.”

“Professionals expect prices to fluctuate most of the time, without going anywhere far. They wait until an upside breakout stops reaching new highs or a downside breakout stops making new lows. Then they pounce—fade the breakout (trade against it) and place a protective stop near the latest extreme point. It's a tight stop, and their monetary risk is low, with a big profit potential from prices returning towards the middle of the congestion zone.”

“So far, the only people who've made money from trading systems are their sellers.”

“The answer is to draw a line between a businessman's risk and a loss. As traders, we always take businessman's risks, but we may never take a loss greater than this predetermined risk.”

“The markets are unforgiving, and emotional trading always results in losses.”

“The public wants gurus, and new gurus will come. As an intelligent trader, you must realize that in the long run, no guru is going to make you rich. You have to work on that yourself.”

“There are good trading systems out there, but they have to be monitored and adjusted using individual judgment. You have to stay on the ball—you cannot abdicate responsibility for your success to a mechanical system.”

“To be a good trader, you need to trade with your eyes open, recognize real trends and turns, and not waste time or energy on regrets and wishful thinking.”

“To help ensure success, practice defensive money management. A good trader watches his capital as carefully as a professional scuba diver watches his air supply.”

“To win in the markets, we need to master three essential components of trading: sound psychology, a logical trading system, and an effective risk management plan.”

“Use limit orders almost exclusively—except when placing stops. Be careful on what tools you spend money: there are no magic solutions. Success cannot be bought, only earned.”

“Why do most traders lose and wash out of the markets? Emotional and mindless trading are big reasons, but there is another. Markets are actually set up so that most traders must lose money. The trading industry slowly kills traders with commissions and slippage.”

“Every winner needs to master three essential components of trading; a sound individual psychology, a logical trading system and good money management. These essentials are like three legs of a stool – remove one and the stool will fall, together with the person who sits on it.
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“Many traders ride an emotional roller coaster and miss the essential element of winning: the management of their emotions.”

“Markets are actually set up so that most traders must lose money.”

“Remember, your goal is to trade well, not to trade often.”