16 October 2018
11 Top Lessons From Veterans
Credit: Rayner Teo
Who are these million dollar traders?
It is very well known that trading in the market has a high failure rate. However, the traders who have made it can go on to become very wealthy and successful. Imagine if all of us could learn from veterans in any field and drastically reduce the time to be good and not suffer some devastating lessons along the way.
Unfortunately, us humans are a complicated bunch. Most of us would rather suffer and learn the hard way ourselves than to follow the advice of the wiser. Don’t be too hard on yourself though because learning from our mistakes is part of the journey.
These millionaire traders have stood the test of time and learned some harsh lessons. An unfortunate but necessary step in anyone’s path to profitability.
The list of traders range from millionaire day traders to option traders. Some of these top traders:
Mark Minervini
Ed Seykota
Nathan Michaud
Marty Schwartz
Jesse Livermore
Richard Dennis
Paul Tudor Jones
William O Neill
David Ryan
Larry Hite
Some of you reading this are struggling to become consistent. Read through these lessons and really try and take away something from them. You will notice that the advice given is from traders old and new.
The same lessons are applicable today as they were in the past. So that leads me nicely on to the first lesson.
Download these lessons from millionaire traders to practice in your own trading
Get The Lessons In PDF
Learn these lessons from this free sheet and follow the steps of the millionaire traders.
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Download
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1. Wall Street Never Changes Because Human Nature Never Changes
A great lesson from top trader Jesse Livermore. Some of you might think that ‘it’s different in the markets nowadays‘ or trading was easier back then. While the rise of HFT’s may have caused some new problems for the average trader, fundamentally the principles remain the same.
The stock market never changes. Why? Because human nature doesn’t change. We are all fearful, greedy and emotional. (some more than others) and this is what causes us to lose money.
How many times have you been up nicely on a trade? Then decided you wanted to make more money and moved your exit point to a more ambitious target.
This is just one example of greed in place. We’ve all done it. And yes it’s bloody annoying ! But our human nature can get in the way.
Human nature means the patterns in the markets are repeatable over time. That lesson was given over 100 years ago and it is still well and truly relevant today.
Ask yourself, Do I allow my human nature to get in the way of my trading decisions?
If the answer is an absolute yes, then you have your first problem to work on! Again, it’s human nature. We all suffer from it in some form or another. The trick is being able to control it.
2. Being Wrong Is Acceptable, But Staying Wrong Is Unacceptable
Here’s a very important lesson from Mark Minervini. It really illustrates the importance of risk management. Every one of us will have losing trades. It’s part of any trading system.
The important thing is we cut our losses short. If we don’t and continue to stay wrong, we could run the risk of going broke. This is one of the most important yet basic lesson in this list.
Don’t let trades get out of hand. Accept you are wrong and move on. Unfortunately, it take some a few very large losses to learn this lesson. If you can loss small while you are learning to trade, you’ll have cash available for when things start to get consistent.
3.Investment Psychology Is By Far The More Important Element, Followed By Risk Control.
A great lesson by Tom Basso. If you’re completely new to trading, this might be lost on you. But very the rest of us, it’s important to remember how much psychology plays a major role in our trading decisions.
Feeling anxious to pull the trigger, betting too big, whatever the problem, these issues are all psychological. They are something that must be controlled. many of us, (myself included in the beginning) don’t understand the importance of psychology in trading.
I would love to be a stone cold emotionless trader but the truth is that it’s an ongoing struggle to remain fully emotionless.
How can you work on psychology and get better? Well, check out this trading psychology post for assistance. This took me years to master and even today I sometimes find myself angry over a mistake I made etc.
So don’t be too hard on yourself. It takes time but always understand that psychology is so very important and you should always be aware of how you feel and your overall emotions when trading.
4. Even A Poor Trading System Could Make Money With Good Money Management
While this can be a controversial lesson, there are some key points to take away from it. Alright, I get it. Some of you will say if the system is poor than you’ll lose money and that may very well be the case.
But the point here isn’t the trading system. It’s about money management. So many of us go from one strategy to another.
Why? Because we try to find the holy grail.
The truth is there’s no holy grail. And if a poor system could make us profitable with good money management, wouldn’t it be better to focus on the money management side of things as opposed to finding the perfect strategy?
Have a look at the equity drawdown graph below and what it would take to make back the money you’ve lost.
millionaire traders
Could you make 400% and come back from a 75% drawdown on equity? These figures are eye opening. Managing risk should always be the number 1 priority.
5. Find A Trading Style That Suits Your Personality
So what is this lesson all about? Well, let’s take an example. If I’m naturally lacking patience, do you think I would make a great position trader? I don’t think so. My personality would be at odds with my strategy and I would find it very tough to have the discipline to follow the strategy.
The same goes for you. Find a trading style that suits your personality. This article on finding the right trading style may be of assistance.
If you find the right style, you’ll find it much easier to remained disciplined during the inevitable drawdown period every strategy goes through.
6. If Most Traders Would Learn To Sit On Their Hands 50 Percent Of The Time, They Would Make A Lot More Money
A lesson by millionaire trader Bill Lipschutz. Fear of missing out or always entering and exiting trades can really eat into your performance. If you can have patience to wait for your trading setups ( yes even as a day trader or scalper) you will see a very big improvement in results.
How many times have you entered a trade early because you couldn’t sit on your hands and wait for the right time?
It happens I know but learning the discipline to follow the strategy is very important. How many times do you wish you didn’t enter a trade or waited? All these errors can ad up over time to something much more problematic.
If you struggle with trading errors, you can download this trading error template to keep track going forward.
7. The Single Most Important Thing Is To Learn From Failures
Ray Dalio believes failure plays an important role in the journey of a trader. Throughout life, we are taught to avoid failure (exams, driving tests etc) but it is a necessary part of anyone’s journey.
Why?
We learn far more from failures than successes. So with that in mind, don’t be afraid to fail. Every billionaire once failed at something. The important part is you learn from the mistakes.
You’ve more than likely heard it many times but the Thomas Edison quote rings true here.
“I have not failed. I’ve just found 10,000 ways that won’t work.”
Talk about never giving up! But as long as you are improving and learning from different mistakes you are making, don’t be discouraged. You will question your own sanity sometimes in this job (I have on countless occasions) and it can really be tough.
But my greatest breakthroughs came right after I made some monumental failures.
8. Perfection In Trading Is Not Necessary
Okay, you are reading that and think what ?? But think about it. Larry Hite said it is incredible how rich you can get by not being perfect. You will encounter many setbacks on your journey but if a trader of his level says this, you should take note.
So many of us want to be perfect. In trading that could manifest itself through wanting to always be right in trades and have a high win percentage. However, that is nonsense.
You see how trading is doing exactly the opposite of what we grew up learning? We should only focus on risk reward. That is a far more important aspect of a trading system than the need for perfection and a high win percentage.
9. Don’t Do What’s Comfortable, Do What’s Right
Picture for a moment you just had a string of losing trades. You followed your trading plan perfectly and still had these losses. It’s normal to encounter these losses. But now imagine another trade is setting up and you are fearful of entering the trade so you don’t pull the trigger.
That trade turns out to be a big winner that would have wiped all those other losses away. Have you ever been there?
In this scenario, you did what was more comfortable, not what was right. Again, don’t be too hard on yourself. We all do it. Learn from it and move on but top traders always pull the trigger.
10. Consistency Is Key
Nate, a day trading millionaire says consistency is key. Wild violent swings in your profit chart is not healthy for the mental health. Keep things simple and follow a proven approach and you are ahead of many in the industry.
Would you rather bet the house on a trade and potentially make or more importantly lose a ton? Or have small consistent gains which add up over time?
I know what I’d prefer. Keep things simple and consistent. Your health is more important 🙂
11. Win or Lose, You Are Responsible For Your Trading Results
How many of us have blamed the markets, the weather, our neighbor or whatever for a poor trading result?
We’ve all made excuses,( well most of us anyway) at one point or another. And where do you think it has gotten us?
Absolutely nowhere!
The trading result didn’t change and we were in the exact same position. So take responsibility for your own trading. How can you ever improve if you don’t take full responsibility for anything you do?
Sure you might feel better blaming others but does it change the outcome? More than likely it doesn’t. So knuckle down and start improving. In the future when you look back with a smile, you’ll be glad you took charge sooner.
What Can We Learn In Summary From These Lessons?
There is a common theme among all these lessons which can be summarized into the following:
Risk Management is EXTREMELY important
Trading psychology plays a MASSIVE role in performance
Failing is part of learning
Risk/Reward is more important than perfection
Focus and discipline are VERY important
Patience is a virtue in trading (wait for the right setup as part of your plan)
More than likely if you have read any trading literature, you’ll have read these lessons before in some form or another. There is good reason you hear it over and over again.
Why? Because it works. Plain and simple.
Final Words
There is a lot to take in from these lessons. I would suggest taking it one step at a time. Focus on getting good on one lesson and then move onto the next one. These millionaire traders have stood the test of time. They were not some overnight success stories so the lessons are tried and tested.
We all have failures but Ray Dalio highlights the importance of failing and learning from it. I’m fully aware some of you are struggling in your trading. I’ve been right there so I know first hand the struggles you are going through.
Who are these million dollar traders?
It is very well known that trading in the market has a high failure rate. However, the traders who have made it can go on to become very wealthy and successful. Imagine if all of us could learn from veterans in any field and drastically reduce the time to be good and not suffer some devastating lessons along the way.
Unfortunately, us humans are a complicated bunch. Most of us would rather suffer and learn the hard way ourselves than to follow the advice of the wiser. Don’t be too hard on yourself though because learning from our mistakes is part of the journey.
These millionaire traders have stood the test of time and learned some harsh lessons. An unfortunate but necessary step in anyone’s path to profitability.
The list of traders range from millionaire day traders to option traders. Some of these top traders:
Mark Minervini
Ed Seykota
Nathan Michaud
Marty Schwartz
Jesse Livermore
Richard Dennis
Paul Tudor Jones
William O Neill
David Ryan
Larry Hite
Some of you reading this are struggling to become consistent. Read through these lessons and really try and take away something from them. You will notice that the advice given is from traders old and new.
The same lessons are applicable today as they were in the past. So that leads me nicely on to the first lesson.
Download these lessons from millionaire traders to practice in your own trading
Get The Lessons In PDF
Learn these lessons from this free sheet and follow the steps of the millionaire traders.
enter your name
enter your email address
Download
Your email address is 100% safe from spam!
1. Wall Street Never Changes Because Human Nature Never Changes
A great lesson from top trader Jesse Livermore. Some of you might think that ‘it’s different in the markets nowadays‘ or trading was easier back then. While the rise of HFT’s may have caused some new problems for the average trader, fundamentally the principles remain the same.
The stock market never changes. Why? Because human nature doesn’t change. We are all fearful, greedy and emotional. (some more than others) and this is what causes us to lose money.
How many times have you been up nicely on a trade? Then decided you wanted to make more money and moved your exit point to a more ambitious target.
This is just one example of greed in place. We’ve all done it. And yes it’s bloody annoying ! But our human nature can get in the way.
Human nature means the patterns in the markets are repeatable over time. That lesson was given over 100 years ago and it is still well and truly relevant today.
Ask yourself, Do I allow my human nature to get in the way of my trading decisions?
If the answer is an absolute yes, then you have your first problem to work on! Again, it’s human nature. We all suffer from it in some form or another. The trick is being able to control it.
2. Being Wrong Is Acceptable, But Staying Wrong Is Unacceptable
Here’s a very important lesson from Mark Minervini. It really illustrates the importance of risk management. Every one of us will have losing trades. It’s part of any trading system.
The important thing is we cut our losses short. If we don’t and continue to stay wrong, we could run the risk of going broke. This is one of the most important yet basic lesson in this list.
Don’t let trades get out of hand. Accept you are wrong and move on. Unfortunately, it take some a few very large losses to learn this lesson. If you can loss small while you are learning to trade, you’ll have cash available for when things start to get consistent.
3.Investment Psychology Is By Far The More Important Element, Followed By Risk Control.
A great lesson by Tom Basso. If you’re completely new to trading, this might be lost on you. But very the rest of us, it’s important to remember how much psychology plays a major role in our trading decisions.
Feeling anxious to pull the trigger, betting too big, whatever the problem, these issues are all psychological. They are something that must be controlled. many of us, (myself included in the beginning) don’t understand the importance of psychology in trading.
I would love to be a stone cold emotionless trader but the truth is that it’s an ongoing struggle to remain fully emotionless.
How can you work on psychology and get better? Well, check out this trading psychology post for assistance. This took me years to master and even today I sometimes find myself angry over a mistake I made etc.
So don’t be too hard on yourself. It takes time but always understand that psychology is so very important and you should always be aware of how you feel and your overall emotions when trading.
4. Even A Poor Trading System Could Make Money With Good Money Management
While this can be a controversial lesson, there are some key points to take away from it. Alright, I get it. Some of you will say if the system is poor than you’ll lose money and that may very well be the case.
But the point here isn’t the trading system. It’s about money management. So many of us go from one strategy to another.
Why? Because we try to find the holy grail.
The truth is there’s no holy grail. And if a poor system could make us profitable with good money management, wouldn’t it be better to focus on the money management side of things as opposed to finding the perfect strategy?
Have a look at the equity drawdown graph below and what it would take to make back the money you’ve lost.
millionaire traders
Could you make 400% and come back from a 75% drawdown on equity? These figures are eye opening. Managing risk should always be the number 1 priority.
5. Find A Trading Style That Suits Your Personality
So what is this lesson all about? Well, let’s take an example. If I’m naturally lacking patience, do you think I would make a great position trader? I don’t think so. My personality would be at odds with my strategy and I would find it very tough to have the discipline to follow the strategy.
The same goes for you. Find a trading style that suits your personality. This article on finding the right trading style may be of assistance.
If you find the right style, you’ll find it much easier to remained disciplined during the inevitable drawdown period every strategy goes through.
6. If Most Traders Would Learn To Sit On Their Hands 50 Percent Of The Time, They Would Make A Lot More Money
A lesson by millionaire trader Bill Lipschutz. Fear of missing out or always entering and exiting trades can really eat into your performance. If you can have patience to wait for your trading setups ( yes even as a day trader or scalper) you will see a very big improvement in results.
How many times have you entered a trade early because you couldn’t sit on your hands and wait for the right time?
It happens I know but learning the discipline to follow the strategy is very important. How many times do you wish you didn’t enter a trade or waited? All these errors can ad up over time to something much more problematic.
If you struggle with trading errors, you can download this trading error template to keep track going forward.
7. The Single Most Important Thing Is To Learn From Failures
Ray Dalio believes failure plays an important role in the journey of a trader. Throughout life, we are taught to avoid failure (exams, driving tests etc) but it is a necessary part of anyone’s journey.
Why?
We learn far more from failures than successes. So with that in mind, don’t be afraid to fail. Every billionaire once failed at something. The important part is you learn from the mistakes.
You’ve more than likely heard it many times but the Thomas Edison quote rings true here.
“I have not failed. I’ve just found 10,000 ways that won’t work.”
Talk about never giving up! But as long as you are improving and learning from different mistakes you are making, don’t be discouraged. You will question your own sanity sometimes in this job (I have on countless occasions) and it can really be tough.
But my greatest breakthroughs came right after I made some monumental failures.
8. Perfection In Trading Is Not Necessary
Okay, you are reading that and think what ?? But think about it. Larry Hite said it is incredible how rich you can get by not being perfect. You will encounter many setbacks on your journey but if a trader of his level says this, you should take note.
So many of us want to be perfect. In trading that could manifest itself through wanting to always be right in trades and have a high win percentage. However, that is nonsense.
You see how trading is doing exactly the opposite of what we grew up learning? We should only focus on risk reward. That is a far more important aspect of a trading system than the need for perfection and a high win percentage.
9. Don’t Do What’s Comfortable, Do What’s Right
Picture for a moment you just had a string of losing trades. You followed your trading plan perfectly and still had these losses. It’s normal to encounter these losses. But now imagine another trade is setting up and you are fearful of entering the trade so you don’t pull the trigger.
That trade turns out to be a big winner that would have wiped all those other losses away. Have you ever been there?
In this scenario, you did what was more comfortable, not what was right. Again, don’t be too hard on yourself. We all do it. Learn from it and move on but top traders always pull the trigger.
10. Consistency Is Key
Nate, a day trading millionaire says consistency is key. Wild violent swings in your profit chart is not healthy for the mental health. Keep things simple and follow a proven approach and you are ahead of many in the industry.
Would you rather bet the house on a trade and potentially make or more importantly lose a ton? Or have small consistent gains which add up over time?
I know what I’d prefer. Keep things simple and consistent. Your health is more important 🙂
11. Win or Lose, You Are Responsible For Your Trading Results
How many of us have blamed the markets, the weather, our neighbor or whatever for a poor trading result?
We’ve all made excuses,( well most of us anyway) at one point or another. And where do you think it has gotten us?
Absolutely nowhere!
The trading result didn’t change and we were in the exact same position. So take responsibility for your own trading. How can you ever improve if you don’t take full responsibility for anything you do?
Sure you might feel better blaming others but does it change the outcome? More than likely it doesn’t. So knuckle down and start improving. In the future when you look back with a smile, you’ll be glad you took charge sooner.
What Can We Learn In Summary From These Lessons?
There is a common theme among all these lessons which can be summarized into the following:
Risk Management is EXTREMELY important
Trading psychology plays a MASSIVE role in performance
Failing is part of learning
Risk/Reward is more important than perfection
Focus and discipline are VERY important
Patience is a virtue in trading (wait for the right setup as part of your plan)
More than likely if you have read any trading literature, you’ll have read these lessons before in some form or another. There is good reason you hear it over and over again.
Why? Because it works. Plain and simple.
Final Words
There is a lot to take in from these lessons. I would suggest taking it one step at a time. Focus on getting good on one lesson and then move onto the next one. These millionaire traders have stood the test of time. They were not some overnight success stories so the lessons are tried and tested.
We all have failures but Ray Dalio highlights the importance of failing and learning from it. I’m fully aware some of you are struggling in your trading. I’ve been right there so I know first hand the struggles you are going through.
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