Best Trading Insights from Ed Seykota

INVESTOPAPER

Ed Seykota is a legendary commodities trader and may be ‘one of the best trader of all time’. He began his career in the 1970s. He focused on computerized trading systems and relied heavily on the concept of trend following.

Here are some of the best trading insights/quotes by Ed Seykota:

Best Trading Insights (quotes) From Ed Seykota

The trading rules I live by are: 1. Cut losses. 2. Ride winners. 3. Keep bets small. 4. Follow the rules without question. 5. Know when to break the rules.

Losing a position is aggravating, whereas losing your nerve is devastating.

If you can’t take a small loss, sooner or later you will take the mother of all losses.

Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.

If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it’s coming in, it’ll never happen. The market is always right.

Speculate with less than 10% of your liquid net worth. Risk less than 1% of your speculative account on a trade. This tends to keep the fluctuations in the trading account small, relative to net worth. This is essential as large fluctuations can engage emotions and lead to feeling-justifying drama.

Longevity is the key to success.

The elements of good trading are: 1. cutting losses. 2, cutting losses. And 3, cutting losses. If you can follow these three rules, you may have a chance.

If I am bullish, I neither buy on a reaction, nor wait for strength; I am already in. I turn bullish at the instant my buy stop is hit, and stay bullish until my sell stop is hit. Being bullish and not being long is illogical.

The trend is your friend except at the end where it bends.

Risk no more than you can afford to lose, and also risk enough so that a win is meaningful.

It can be very expensive to try to convince the markets you are right.

Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible.

Trying to trade during a losing streak is emotionally devastating. Trying to play “catch up” is lethal.

Words Of Wisdom From The Book ‘Trading For A Living’