Home > The Business of Trading > Professional Trading > What is the single, most effective piece of financial advice you've ever received?

What is the single, most effective piece of financial advice you've ever received?

  1. Preferrably something that has had a notable impact on your life.
  2. Buy and hold………

  3. Buy when things go on sale. IOW, buy during market crashes.
  4. follow the trend
  5. Trading is a business, not gambling. Manage risk today so you can stay in business for the good times tomorrow.
  6. Understanding of the following:
    Compound interest
    Risk of ruin
  7. Wasn't financial advice but rather a quote from Sherlock Holmes.

    When asked, "Just what is it that you do, Mr. Holmes?" He replied, "I observe and deduce".
  8. 1, "Neither a borrower nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge" - William Shakespeare

    2, "There's no such thing as a free lunch" - Milton Friedman (But heard it first from my Grandpa)

    3, "If it looks to good to be true, it most likely is"

    4, “The bitterness of poor quality remains long after the sweetness of low price is forgotten” – Benjamin Franklin (a follow up to item #2 & #3)
  9. The best advice ever is "Never take advice". Meaning, trying to figure it out on your own will be worth more than any advice you could ever receive. And once you reach that stage, you'll be set for life. But if you can't figure it out on your own, at least you'll know what you're worth!
  10. Greetings, these are a few of my favorites from various folks, some altered to better "speak" to me.

    "When you know, and you know that you know, your confidence changes what some might deem to be high risk, into a simple matter of the probabilities."

    "One needs to craft out their own unique financial way of life, work, and living, so as not to be ensnared and enslaved by another man's designs."

    "Though no one can go back and make a brand new start, anyone can make a start from right now, and make a brand new ending."


  11. Learn.png
  12. "Invest at least 10% of your money in your education and development."
  13. When I was very young my uncle told me "Save every penny you can while your earning power is the greatest". And now I'm the miser that he was!
  14. Wrong for a penny. Right for a pound ;)
  15. It would be well for a trader to consider this...."You can't eat like a bird and shit like an elephant."
  16. The idea that there are earning plateaus.

    Roughly 50k, 150k, 300k, 1m, 3m, 10m.

    And that moving from one plateau to the next usually takes doing something different or acquiring a new skill. Not just doing the same thing better.
  17. That's a more lively, illustrative, version of what Achilles28 said.
    "Wrong for a penny. Right for a pound"
  18. Never risk more than 2% of TLNW (Total Liquid Net Worth) on any one trade/idea.
  19. Always avoid margin calls.
  20. "You shouldn't believe everything you read on the Internet" - Abraham Lincoln.
  21. LOL "Lincoln" <---- and all this time I thought it was Al Gore
  22. Advice from my first broker many years ago:

    Shit happens. Be prepared for it.
  23. "You' d better learn about matching algorithms"...
  24. "Never hate your enemies, it affects your judgement"
    & "Keep your friends close, but your enemies closer"
    - The GodFather
  25. In wealth building "spend less than you earn and invest the difference", in trading "never risk more than 1% of your equity"
  26. Buy a new house (or resale) every 10 years. Between the forced savings (mortgage), appreciation and inflation, you'll end up way ahead of the game.
  27. [​IMG]
    ...I know my reply may seem like an amateur/noob trader thing to say, but oh well -- this is what moved me. :sneaky:
    Greed is good in of itself, and also on the flip side of the coin...its subsequent consequences.
  28. "It can't be done"
  29. "Trading is about managing risk, not about maximizing profit: your primary responsibility when you sit down at 9.00 this morning to start trading is to be able to sit down again at 9.00 tomorrow morning to start trading."

    (And one more: "Buy the dips in an uptrend and sell the peaks in a downtrend" has also been pretty good to me, and is what several of my methods boil down to.)
  30. "Read this book : Market Wizards". Best advice ever.
    If you understand how smart people and pros made money by the past, you will make money in the future.

  31. Best advice I can give you is never take advice from anonymous names on an ET thread.
  32. Over long periods, the small cap value universe outperforms every other stock universe ....
  33. Buy low,sell high --->OFTEN!
  34. Your subconscious is wired to prevent success for most of those involved in the markets as traders.
  35. SPOT ON
  36. Buy at least one rental house each year, been doing so since I was eighteen, am 59.

    Day trading, Back test till you have all the answers.

    Long term, use weekly charts.

    You not trading price, you managing risk which is my advise.
  37. Right, Bro. And you have teams of traders whom you buy homes for after one year. Buying rental homes since you were 18, yet your posts state you were broke in the 80s. A night job paying $35K when you were 23 years-old. in 1981. Sure, that's $100K in today's dollars.

    And you have Klinefelter's but have kids as well. I have a background in LS. I have never met nor heard of someone with Klinefelter's fathering children. Sure, you adopted.

    You're affable, but please don't keep up with this fantasy. It's harmless I suppose, but wtf, find another hobby.
  38. From Mark Douglas author of "The Disciplined Trader"

    "If there is such a thing as a secret to the nature of trading, this is it: At the very core of one's ability, to trade without fear or over confidence; perceive what the market is offering from its perspective; stay completely focused in the 'now moment' opportunity flow; and spontaneously enter 'the zone' -- a strong virtually unshakable belief in an uncertain outcome with an edge in your favor"

    I have this laminated and read it several times a day.
  39. Exactly.

    Trading wiz (now worth quite a few hundreds of millions) Blair Hull has a saying:

    "Know your edge, exploit your edge— survive the game"

    Surviving the game through prudent risk management is key in many walks of life- especially trading!
  40. #1 If you want a pay rise, move on from your employer.
    #2 If you want rent decrease, move to another house.
    I wish I had learnt #1 years earlier, there is no loyalty but loyalty to yourself when it comes to work.
  41. The best advice I can give is listen to everyone. Even a fool has some wisdom.
  42. This is the closest example of wisdom relative to trading.

    What do you see?


    And a little more difficult one to reflect one's own bias.


    Which way is the dancer spinning?
    EDIT: google spinning dancer for animated gif

    Can you see her spin the opposite way?

    Lot's of times in the past I experienced being a trapped trader because I didn't understand the role of ambiguity and speculation in the world of duality.

    It wasn't until my unrelenting desire for truth served up some unintended consequences. Truth starts with oneself and admitting all the things we wish weren't true and are - contrasted by all the things we wished were true and aren't accomplishes something.

    The acceptance of how things just are.

    Know thy Self & to thine own Self be true.

    We all have a reason and purpose for Being, some based on what's Real and a lot based on superficial distractions. When we open ourselves up to to larger, broader, wiser aspects of our Being - meaning, purpose and synchronicity align to create serendipitous encounters, connections and experiences.

    Each step taken in faith reveals the next. Faith in agency not outside oneself but rather within.
  43. %%
    Good trend advice -after all the years.
  44. Best advice ever is from George Soros (via Stanley Druckenmiller ...

    “Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular.”

    “I’ve learned many things from [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.”
  45. You must understand the real value of money.This one alone should be ok.
  46. Soros had conviction that if Trump was to be elected there would be a stockmarket crash. The stockmarket went to record highs since Trump got elected.
  47. Limit your losses. Not a quote exactly, but this theme is the most consistent I've seen emphasized by all successful traders. From looking at the Market Wizards interviews, to Reminiscences of a Stock Operator, limiting the losses and preservation of capital is the most important.

    The profits take care of themselves. I used to just focus on setups/entries with no risk management in mind when I entered the trade. I'd sometimes grow my account WAY up and then with a few bad trades, knock it right back down and in some case, completely blow it out.
  48. He and Stan were not always right, Stan said that. But when they were wrong, they got out, cut their losses quickly and moved on. So the key lesson from them is how quickly do we determine we are right or wrong and if wrong how quickly do we get out.
  49. You are right, at any moment there are as many buyers as sellers. So 50% sees a buy and half sees a sell.
  50. So when a price rises or falls there are 50% buyers vs sellers?
    Check market depth, it is not 50/50 at the same prices.
  51. For every transaction, there are an equal number of shares changed hand from buyer to seller? No?o_O
  52. That completely discounts the fact that he is the second highest hedgefund earner (in dollar terms) in history (only behind bridge water which had like 10x the assets).
  53. Tru dat.
    At market tops weak hands buy, strong hands sell.
  54. Don't drink and trade.
  55. Trade from the first floor! You never know when you might feel the need to jump out that window.
  56. Bias!
  57. 1. Never take a laxative just before the market opens.

    2. Never take Viagra just before the market opens.

    Never take Viagra and a laxative together. You won't
    know if you're coming or going.
  58. Multiple streams of income.
    Wasn't even a thought back in the late 90's and 00's when trading was a monthly printing press.
    But now thanks to HFT and the complete evaporation of liquidity and volatility, traders who diversified into alternative income opportunities are still doing fine while so many others are burning through their cash just to pay bills.
  59. %%
    Good- great one. I ran this one that follows past Don Bright Trading Co,[ Sponsor @ that time] even though i seldom day trade. In all labor there is profit-[King Solomon] .Don Bright liked that one :cool::cool::caution::caution:
  60. In the first one, I see all markets downtrending on a chart.

    In the second one, I see the head of Spielberg's "E.T." attached to the body of a man with a HUGE boil on the right side of his chest. So there's no "her" for me there, more like "WTH is that?" :)
  61. %%
    True Mr Mickey. Paul t Jones does that; but plenty of strong hands, funds +mutual fund buy HI [+ high areas] in uptrending bull market.[ Bull market=higher highs + higher lows.....] IBD made/proved his fortune with that:thumbsup::cool::cool::caution::caution:
  62. %%
    TRUE; but as i told an elite trader/market maker, if end of day price closes up- i name that= buy volume;if price closes down[ reg hours] its sell volume:thumbsdown::thumbsup::cool::cool:
  63. I'd amend this by re-phrasing;
    At swing high tops, some hands will buy, some will sell. The market has symmetry for both Shorts and Longs.

    After entry;
    The long position becomes stronger with increasing price and increasing volume.
    The long position becomes weaker with increasing price and decreasing volume.
    The long position becomes weakest with decreasing price and increasing volume.
    The strongest position for the Short is at the end of the Long move, which can be identified as a zone closer to the Left Trend line than the RTL.

    The short position becomes stronger with decreasing price and increasing volume.
    The short position becomes weaker with decreasing price and decreasing volume.
    The short position becomes weakest with increasing price and increasing volume.
    The strongest position for the Long is at the end of the Short move, which can be identified as a zone closer to the Left Trend line than the Right Trend line.

    A move is composed of three legs. A leg is the Dominant move of price and volume together in a unified direction. The middle leg is the non-Dominant move where price is observed to retrace some of the prior leg's price action. It's characteristic is one of decreasing volume when compared to the prior leg's volume. The third leg is a return to Dominant price and volume direction.
    The steeper the RTL per unit of time, the greater the money making velocity. The strongest trades are always orthogonal on a chart.

    The exit is what proves the entry.
    Up until this point the future is coalescing into the present, the field of possibilities once limitless now diminishes until price can only take the path of least resistance. In this particular example, Resistance is not Buyers vs Sellers for it's always evenly paired, it's the absence of perceived value and a diminishment in the willingness to engage in transactions - this manifests as decreasing volume.

    It is at this point the minority take positions for the next profit taking segment.
  64. but you are missing part 2. As the market rallied, Soros realized he was on the wrong side of the trade, He covered and went long. An example of what was said in post 45 by Visaria.
  65. Most of it is proprietary. But, the one thing that has stuck with me is, credit creation.
    Most of these pikers are at home or work wishing they could trade for a living.
    If you fully understand credit creation, you could've retired before 30.
  66. %%
    Good points,Sprout.
    When possible i prefer increasing red[sell] volume on shorts/bear market, not that the market does that, all bear markets.LOL
    Plenty , plenty,of uptrending bull moves/ happen$ on average volume; or in some summers below average volume.:D:cool::caution::caution:PS runaway/best trends have consistantly, a lot more than 3 legs, not that all trends are runaway. Thanks
  67. I agree. There are trends that extend the 3 leg concept with additional non-DOM and Return to Dominance PV moves. Fascinating in that by going to a slower timescale, the 3-leg pattern of Dominance to nonDominance and return to Dominance reasserts itself as a pattern that can be observed.

    The volume I'm referring to is relative bar-by-bar - which provides more detail than above or below average volume.

    When it comes to averages, Dry Up volume and First Rising Volume have more to offer illuminating possible PA.
  68. Real good maybe not the best; investing [trading ]is like shooting.T Basso, President-Trendstat:caution::caution:
  69. The financial markets is not a lottery...
  70. I don't understand....can u pls enlighten me?
  71. Money isn`t everything, money is the only thing.It`s like air or water that are usually taken for granted.If you start to see and honour its real value then something happens.
  72. Tbh, this sounds like nonsense.

    'Money isn't everything, it is the only thing?'
  73. [​IMG]
  74. Nice.
  75. In theory that's my method, but in practice I can't execute like so... I think I need to build systems to do..
  76. No, don't need to build anything, JBTFD!
  77. Never run behind the market without knowing why everyone is heading there
  78. Have a plan
  79. plans!
  80. you get what you want out of the markets. by ed seykota

    I would add "if you have the time".
  81. Learn the markets, no one will look after your money better than yourself. Everyone else will have their hands in your pockets.
  82. %%
    Well Stock Traders Almanac[book by Hirsch]lumps all the years together some times. Great book; but bull markets + bear markets differ so much i dont treat them the same @all.Another difference in the single stock markets, usually a single stock merger will not hurt to bad, unless over leveraged in a bear move.....:cool: As far as a single piece of advice , i wish it were that simple:D
  83. Always thought of that quote as completely asinine.

    So everyone who tried and failed wanted to fail? Complete nonsense.
    I know guys who would have literally cut off their sack to succeed but it just never worked out despite all their hard work and effort.
  84. Yeah, I should have done that since 2009. Stupid me. Shorting...
  85. Don't day trade.
  86. That Benjamin Franklin quote is pure gold!
  87. Misers get a bad rap. That's producer's propaganda. Spendthrift is the way to be.
  88. I think some very wealthy people have violated this principle.
  89. Greed makes the markets! You could say tolerance of greed is the transition point between a central-planned and a free market economy.
  90. "It takes courage to be a pig." Stan Druckenmiller
  91. "It takes courage to be Stan Druckenmiller"- Pig
  92. Some.
  93. Does than don't put more than 2% in a passive S&P buy and hold index fund? Or can something like that comprise more than 2%.
  94. Are you expecting the fund to go to zero?
  95. Don't invest in race horses. Know people lost incredible sums in buying and getting those animals trained.
  96. I don't plan for the S&P 500 to go to zero. It diversifies away single-stock risk, and the S&P has never gone to zero in its decades-long history.
  97. That's correct, thus a lot more than 2 percent of a portfolio could be in the fund you speak of.
  98. Anything Gordon Gekko said to Bud Fox...is the most effective financial/trading advice I've ever received, or heard.
    [​IMG] o_O
    GG is a hawk. -- and he can spot and read your mouse butt a mile away.
    GG is filet mignon, and Bud Fox is hamburger.

    I'm number 99....1999 is one of my favorite years, if not the favorite.
  99. Correct. Risk management is all we have in this business. There is nothing else.
  100. Trust your strategy and exclude human factor
  101. So random entries plus risk management yield positive expectancy and thus profit? That's hard for me to believe. Making money in the markets is predicated on being right about something. Risk management helps mitigate the times when we are not right.

    being right + risk management = profitability
  102. Prudent Risk Management is all that is available to the retail trader. It IS the edge.
  103. Survivor bias.
  104. If it flies

    It's cheaper to rent it

  105. "Trust" by itself is a human factor, isn't it? :D

  106. OMFG LOL! Logically, that is correct! Can't fault it! hahahahaha

    Mr. Spock, Mr. Tuvok and Mr. Data would be proud!
  107. the only human factor applicable
  108. stay away from flashy financial professionals
  109. DON'T listen to financial experts & financial news .