Blog: Trading Tips

William J. O’Neil is an American entrepreneur, stockbroker and writer, who founded the stock brokerage firm William O’Neil & Co. Inc in 1963 and the business newspaper Investor’s Business Daily in 1983.

He is the author of the books “How to Make Money in Stocks”, “24 Essential Lessons for Investment Success” and “The Successful Investor” among others, and is the creator of the CANSLIM investment strategy.

In this post, I will share all the best trading tips and quotes from William O’Neil, so that we can learn from his knowledge and experience.

Here are some of the best trading tips and quotes by William O’Neil:

The stocks that go up the most from where you bought them are your flowers; those that are down from where you bought them are your weeds. If weeds appear, don’t hesitate to reach for the trowel.
Personal opinions, feelings, hopes, and beliefs about the stock market are usually wrong and often dangerous. Facts and markets, on the other hand, are seldom wrong.
The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.
A great trader once noted there are only two emotions in the market: hope and fear. “The only problem,” he added, “is we hope when we should fear, and we fear when we should hope.” This is just as true in 2009 as it was in 1909.
When everybody is running around saying how great a stock is, everybody who can buy probably already has, and the only direction for the stock to go at that point is down. When it’s obvious and exciting to everyone, it’s too late!
The moral of the story is: never argue with the market. Your health and peace of mind are always more important than any stock.
It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.
The market has a simple way of whittling all excessive pride and overblown egos down to size. After all, the whole idea is to be completely objective and recognize what the marketplace is telling you, rather than try to prove that the thing you said or did yesterday or six weeks ago was right. The fastest way to take a bath in the stock market or go broke is to try to prove that you are right and the market is wrong.
90% of the people in the stock market, professionals and amateurs alike, simply haven’t done enough homework.
Over-diversification is a hedge for ignorance.
Purpose is a more powerful motivator than money. When you are not paid as much as you would like, your purpose will provide you a reason to continue producing excellence in your work. When you have more money than you ever thought possible, your purpose will provide you with a reason to continue producing excellence in your work.
Investors cash in small, easy-to-take profits and hold their losers. This tactic is exactly the opposite of correct investment procedure. Investors will sell a stock with profit before they will sell one with a loss.
The number one market leader is not the largest company or the one with the most recognized brand name; it’s the one with the best quarterly and annual earnings growth, return on equity, profit margins, sales growth, and price action.
Plot out your mistakes on charts, study them, and write some additional rules in order to correct your mistakes and the actions that cost you money.
Remember, keep it simple. Investing is hard enough. Stick to the basic rules of CAN SLIM and don’t complicate it by getting super-tricky.
Over time, you’ll learn that only one or two out of every 10 stocks you buy will be truly outstanding and capable of doubling or tripling or more in value.
Buying a stock without knowing when or why you should sell it is like buying a car with no brakes, or being in a boat with no life preservers, or taking flying lessons that teach you how to take off but not how to land.
There is no reason any investor should ever in any bull market buy or sit with a poor-performing stock with a Relative Strength Rating of 10, 20, 30, 40, or 50. The market is bluntly telling you that that investment is a relatively poor or mediocre choice.
When you appear to be right always follow up.
Learn to always sell stocks quickly when you have a small loss rather than waiting and hoping they’ll come back.
At least 50% of the whole game is the general market.
Success in a free country is simple. Get a job, get an education, and learn to save and invest wisely. Anyone can do it. You can do it.

Now that I have shared the best trading tips and quotes from William O’Neil, which is your favourite trading tip?

Let me know in the comments below.

If you would like to get more trading tips and quotes from all the best traders, also check out: “Best Trading Tips & Quotes from Legendary Top Traders”

Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.

Best Trading Tips & Quotes from George Soros

George Soros is a Hungarian-American billionaire investor and philanthropist.

As of February 2018, he had a net worth of $8 billion, having donated more than $32 billion to his philanthropic agency, the Open Society Foundations.

He is known as “The Man Who Broke the Bank of England” because of his short sale of US$10 billion worth of pounds sterling, which made him a profit of $1 billion during the 1992 Black Wednesday UK currency crisis.

His hedge fund (Quantum Fund) started with $12 million AUM, and as of 2011 it had $25 billion, the majority of Soros’s overall net worth.

In this post, I will share all the best trading tips and quotes from George Soros, so that we can learn from his knowledge and experience.

Here are some of the best trading tips and quotes by George Soros:

If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.
I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.
My approach works not by making valid predictions but by allowing me to correct false ones.
I very often used to get backaches due to the fact that I was wrong. Whenever you are wrong you have to fight or [take] flight. When [I] make the decision, the backache goes away.
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 financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.
Markets are constantly in a state of uncertainty and flux, and money is made by discounting the obvious and betting on the unexpected.
The worse a situation becomes, the less it takes to turn it around, and the bigger the upside.
Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes.
Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.
When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold. I called gold the ultimate bubble, which means it may go higher. But it’s certainly not safe and it’s not going to last forever.
If I had to sum up my practical skills, I would use one word: survival. And operating a hedge fund utilized my training in survival to the fullest.
Whenever there is a conflict between universal principles and self-interest, self-interest is likely to prevail.
The hardest thing to judge is what level of risk is safe.
Unfortunately, the more complex the system, the greater the room for error.
The generally accepted view is that markets are always right — that is, market prices tend to discount future developments accurately even when it is unclear what those developments are. I start with the opposite view. I believe the market prices are always wrong in the sense that they present a biased view of the future.
Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test. The main difference is that the hypothesis that underlies an investment decision is intended to make money and not to establish a universally valid generalization. Taking this view, it is possible to see financial markets as a laboratory for testing hypotheses, albeit not strictly scientific ones. The truth is, successful investing is a kind of alchemy.
I would be lying, however, if I claimed that I could always formulate worthwhile hypotheses on the basis of my theoretical framework. Sometimes there were no reflexive processes to be found; sometimes I failed to find them; and, what was the most painful of all, sometimes I got them wrong. One way or another, I often invested without a worthwhile hypothesis and my activities were not very different from a random walk.
Money values do not simply mirror the state of affairs in the real world; valuation is a positive act that makes an impact on the course of events. Monetary and real phenomena are connected in a reflexive fashion; that is, they influence each other mutually. The reflexive relationship manifests itself most clearly in the use and abuse of credit.
The only thing that could hurt me is if my success encouraged me to return to my childhood fantasies of omnipotence — but that is not likely to happen as long as I remain engaged in the financial markets, because they constantly remind me of my limitations.
When you sell options, you get paid for assuming risk. That can be a profitable business, but it does not mix well with the risks inherent in a leveraged portfolio.
The trouble with institutional investors is that their performance is usually measured relative to their peer group and not by an absolute yardstick. This makes them trend followers by definition.
We [at Soros Fund Management] use options and more exotic derivatives sparingly. We try to catch new trends early and in later stages we try to catch trend reversals. Therefore, we tend to stabilize rather than destabilize the market. We are not doing this as a public service. It is our style of making money.
Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend. The two elements interact with each other in a reflexive manner.
I contend that financial markets never reflect the underlying reality accurately; they always distort it in some way or another and the distortions find expression in market prices. Those distortions can, occasionally, find ways to affect the fundamentals that market prices are supposed to reflect.

Now that I have shared the best trading tips and quotes from George Soros, which is your favourite trading tip?

Let me know in the comments below.

If you would like to get more trading tips and quotes from all the best traders, also check out: “Best Trading Tips & Quotes from Legendary Top Traders”

Best Trading Tips & Quotes from Alexander Elder

Alexander Elder, M.D., was born in Leningrad and grew up in Estonia, where he entered medical school at the age of 16.

At 23, while working as a ship’s doctor, he jumped a Soviet ship in Africa and received political asylum in the US, where he worked as a psychiatrist.

This provided him with unique insight into the psychology of trading.

He is the author of “Trading for a Living”, considered a modern classic among traders.

First published in 1993, this international best-seller has been translated into more than a dozen languages and is being used to educate traders around the world.

In this post, I will share all the best trading tips and quotes from Alexander Elder, so that we can learn from his knowledge and experience.

Here are some of the best trading tips and quotes by Alexander Elder:

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.
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.
The markets are unforgiving, and emotional trading always results in losses.
Traders lose because the game is hard, or out of ignorance, or lack of discipline or because of both.
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.
The goal of a successful trader is to make the best trades. Money is secondary.
When a beginner wins he feels brilliant and invincible, then he takes wild risk and loses everything.
An astute trader aims to enter the market during quiet times and take profits during wild times.
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.
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.
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.
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.
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.
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.
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.
Many traders ride an emotional roller coaster and miss the essential element of winning: the management of their emotions.
If you let the market make you feel high or low, you will lose money.
Remember, your goal is to trade well, not to trade often.
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.
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.
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.
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.
It is essential to wait for trades with a good risk / reward ratio. Patience is a virtue for a trader.
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.
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.
When the market deviates from your analysis, you have to cut losses without fuss or emotions.
It pays to write down your plan. You need to know exactly under what conditions you will enter and exit a trade. Do not make decisions on the spur of the moment, when you are vulnerable to being sucked into the crowd. Plans are created by reasoning individuals. Impulsive trades are made by sweaty group members.

Now that I have shared the best trading tips and quotes from Alexander Elder, which is your favourite trading tip?

Let me know in the comments below.

If you would like to get more trading tips and quotes from all the best traders, also check out: “Best Trading Tips & Quotes from Legendary Top Traders”

Best Trading Tips & Quotes from Nicolas Darvas

Nicolas Darvas was a dancer, self-taught investor and author.

During his off hours as a dancer, he had read some 200 books on the market and on speculators, sometimes reading up to eight hours a day.

At the age of 39, after accumulating his fortune and also being exposed in Time magazine, Darvas documented his actions in the book, “How I Made 2,000,000 in the Stock Market”.

The book describes his “Box System”, which he used to buy and sell stocks.

In this post, I will share all the best trading tips and quotes from Nicolas Darvas, so that we can learn from his knowledge and experience.

Here are some of the best trading tips and quotes by Nicolas Darvas:

I believe in analysis and not forecasting.
All a company report and balance sheet can tell you is the past and the present. They cannot tell future.
First check whether the market as a whole is rising or falling. In other words, are you in a bull market or bear market? If the latter, stay out. The odds are against you.
I knew now that I had to keep rigidly to the system I had carved out for myself.
I was successful in taking larger profits than losses in proportion to the amounts invested.
I decided to let my stop-loss decide. (on when to exit an up trending stock)
I also learned to stay out of bear markets unless my individual stocks remain in their boxes or advance.
I became over-confident, and that is the most dangerous state of mind anyone can develop in the stock market.
I decided never again to risk more money than I could afford to lose without ruining myself.
I made up my mind to buy high and sell higher.
I accepted everything for what it was-not what I wanted it to be.
I listened eagerly to what they had to say and religiously followed their tips. Whatever I was told to buy, I bought. It took me a long time to discover that this is one method that never works.
Like human beings, stocks behave differently. Some of them are calm, slow, conservative. Others are jumpy, nervous, tense. Some of them I found easy to predict. They were consistent in their moves, logical in their behavior. They were like dependable friends.

Now that I have shared the best trading tips and quotes from Nicolas Darvas, which is your favourite trading tip?

Let me know in the comments below.

If you would like to get more trading tips and quotes from all the best traders, also check out: “Best Trading Tips & Quotes from Legendary Top Traders”

Best Trading Tips & Quotes from Richard Dennis

Richard J. Dennis, a commodities speculator once known as the “Prince of the Pit”, started off by borrowing $1,600 from his family, which after spending $1,200 on a seat at the MidAmerica Commodity Exchange left him $400 in trading capital.

In 1970, his trading increased this to $3,000, and in 1973 his capital was over $100,000.

He made a profit of $500,000 trading soybeans in 1974, and by the end of that year was a millionaire, just short of twenty-six years of age. By 1980, his capital had grown to over $200 million.

In this post, I will share all the best trading tips and quotes from Richard Dennis, so that we can learn from his knowledge and experience.

Here are some of the best trading tips and quotes by Richard Dennis:

In the real world, it is not too wise to have your stop where everyone else has their stop.
I always say that you could publish trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anybody can make up a list of rules that are 80 percent as good as what we taught people. What they couldn’t do is give them the confidence to stick to those rules even when things are going bad.
When things aren’t going right, don’t push, don’t press.
I could trade without knowing the name of the market.
There are lots more false breakouts, perhaps because there are more computer-based trend followers.
It is misleading to focus on short-term results.
You have to minimize your losses and try to preserve capital for those very few instances where you can make a lot in a very short period of time. What you can’t afford to do is throw away your capital on suboptimal trades.
When you have a position, you put it on for a reason, and you’ve got to keep it until the reason no longer exists.
When you are getting beat to death, get your head out of the mixer.
There is another point that I think is as important: You should expect the unexpected in this business; expect the extreme. Don’t think in terms of boundaries that limit what the market might do. If there is any lesson I have learned in the nearly twenty years that I’ve been in this business, it is that the unexpected and the impossible happen every now and then.
Trading decisions should be made as unemotionally as possible.
You should always have a worst case point. The only choice should be to get out quicker.
Trade small because that’s when you are as bad as you are ever going to be. Learn from your mistakes.
If there is any lesson I have learned in the nearly twenty years that I’ve been in this business, it is that the unexpected and the impossible happen every now and then.
I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.
Trading has taught me not to take the conventional wisdom for granted. What money I made in trading is testimony to the fact that the majority is wrong a lot of the time. The vast majority is wrong even more of the time. I’ve learned that markets, which are often just mad crowds, are often irrational; when emotionally overwrought, they’re almost always wrong.
Almost anybody can make up a list of rules that are 80 percent as good as what we taught people.
I’ve learned that markets, which are often just mad crowds, are often irrational; when emotionally overwrought, they’re almost always wrong.
The market being in a trend is the main thing that eventually gets us in a trade. That is a pretty simple idea. Being consistent and making sure you do that all the time is probably more important than the particular characteristics you use to define the trend. Whatever method you use to enter trades, the most critical thing is that if there is a major trend, your approach should assure that you get in that trend.
A good trend following system will keep you in the market until there is evidence that the trend has changed.

Now that I have shared the best trading tips and quotes from Richard Dennis, which is your favourite trading tip?

Let me know in the comments below.

If you would like to get more trading tips and quotes from all the best traders, also check out: “Best Trading Tips & Quotes from Legendary Top Traders”