Top Trading Tips From Successful Traders

If you've done even a bit of research into trading, you’ve probably come across countless books on how to improve your skills. One book that’s often recommended is "Market Wizards: Interviews with Top Traders" by Jack Schwager. First published in 1989, this classic offers insights from some of America’s legendary traders who have made millions in the financial markets. It’s a must-have for your bookshelf.

Here are some timeless tips from the world’s top traders featured in this enduring book:

1. Find Your Trading Methodology
   Every successful trader has a unique approach to analyzing the markets, whether it’s focusing on short-term price changes throughout the day or spotting major trends over months or even years. The key is finding a strategy that aligns with your own "trading personality." If a method doesn’t feel right for you, it’s unlikely to be effective in the long run.
2. Develop a Sensible Risk Management Strategy
   All the traders in the book emphasize the importance of risk control. This involves trading at a size that won’t significantly impact your account if things don’t go as planned. It’s also wise to set a specific level (or place a stop loss) where you’ll exit the trade if it moves against you. The discipline to stick to these risk controls is a common trait among successful traders.
3. Accept Your Trading Losses
   Accepting losses is a crucial part of trading. Experienced traders understand that taking manageable losses is part of the game, even though it can be tough for newcomers. One big loss can erase the gains from several winning trades if you let it run too long. The traders interviewed were confident in their long-term strategy, so they didn’t hesitate to admit when they were wrong and cut their losses.
4. Invest Time in Understanding and Analysing the Markets
   These top traders took market analysis seriously, dedicating significant time to executing and managing their trades. They weren’t just making random bets or trading on a whim. Success in trading doesn’t come from shortcuts; it’s the result of consistent effort and dedication, as evidenced by their impressive results.
5. Wait for the Right Trade
   Patience is a recurring theme among the traders in Schwager’s book. Many of them emphasized the importance of waiting for the right opportunity. This idea echoes a famous quote from another classic trading book, "Reminiscences of a Stock Operator," about legendary trader Jesse Livermore. He said that his profits came not from action, but from "sitting on his hands"—waiting for the right moment and then holding onto a trade to maximize profits. Nearly 100 years later, this approach is still used by successful traders and was repeatedly mentioned by the interviewees in "Market Wizards."