6 Quotes Forex Traders Should Read Daily

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6 Quotes Forex Traders Should Read Daily
Warren Buffett - $46 billion is a pretty convincing reason to listen to his advice.
Source: Flickr/Fortune Live Media
Advice is free and plentiful, but good advice can be hard to come by - especially when it comes to forex trading. In seeking good advice on forex trading, you can do a lot worse than the world’s greatest investors. We’ll look at some important quotes from great investors and see what they mean to you as a forex trader.

Trading Advice from Jesse Livermore

Jesse Livermore has many nicknames, including the boy plunger and the great bear of Wall Street. Livermore was an exceptional stock trader when he followed his own advice, but his lack of discipline lost as many fortunes as his talents won. Here’s what he had to say.

"There is only one side of the market and it is not the bull side or the bear side, but the right side."

The Forex Takeaway
: When he was on his game, Livermore was all about going with the trend. There is as much money to be made in trading with the trend as there is in timing reversals - but the latter is much harder than the former.

"When I'm bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don’t buy long stock on a scale down, I buy on a scale up."


The Forex Takeaway: Livermore’s best trades when built up positions rapidly as the market confirmed his investing thesis, essentially adding to winning positions as long as they kept winning. If a position started losing, he’d cut his losses and throw out whatever idea he had rather than staying in until the market proved him right. Livermore’s life is a great lesson for all forex traders, as he admitted that his inability to stay with a successful system cost him two fortunes.

Trading Advice from George Soros

George Soros still holds the world title for the greatest trade ever made in the currency markets. He’s written a lot on trading and how he does it, but there is one quote that stands out above the rest in terms of utility and reinforces Livermore’s lessons.

"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 Forex Takeaway:
Can’t really add much to that - kill losing positions quickly and build up the winning ones. Enough said.

Trading Advice from Warren Buffett

Warren Buffett isn’t one of the world’s richest men by accident. He is one of the smartest investors around and there is a lot that traders can learn from the Oracle of Omaha.

"When you combine ignorance and leverage, you get some pretty interesting results."


Forex Takeaway:
Leverage is a great tool when you are ready to use it responsibly. It allows you to increase your profits rapidly. That said, you need to learn how to be consistently profitable before you start adding large amounts of leverage into the mix.

"If past history was all there was to the game, the richest people would be librarians."

Forex Takeaway: While looking at past data and testing your trading strategy against past data is important, know that studying the past doesn’t mean you will be able to predict the future. In forex trading, the past doesn’t matter as much as we’d like to think, and dwelling on past information can lead a trader to overconfidence and a costly introduction to the current reality.

"Wide diversification is only required when investors do not understand what they are doing."


Forex Takeaway: When you are trading forex, don’t try to apply your strategy to every currency pair on every chart. Stick to a few pairs, learn how they work and see what affects them. You may branch out as you become comfortable and experienced. A beginner trying to trade multiple indicators across multiple currency pairs is a blown account waiting to happen.

Those are my picks for great quotes that are worth reading before you get down to work. Feel free to drop me a line if you have a great quote that has helped you in your trading.


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About Andrew Beattie
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Andrew Beattie has spent most of his career writing, editing and managing financial content as well as more general web site material in all its many forms. He is especially interested in the future of search and the application of analytics to the business world. He has been a long-time contributor to Investopedia.com and is currently venturing forth on ForexDictionary.
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