A Complete Guide to the Futures Market, 2nd Edition

CHAPTER 38

50 Market Wizard Lessons^*

There is no such thing as being right or beating the market. If you make money, it is because you understood the same thing the market did. If you lose money, it is simply because you got it wrong. There is no other way of looking at it.

—Musawer Mansoor Ijaz

The methods employed by exceptional traders are extraordinarily diverse. Some are pure fundamentalists; others employ only technical analysis; and still others combine the two methodologies. Some traders consider two days to be long term, while others consider two months to be short term. Yet despite the wide gamut of styles, I have found that certain principles hold true for a broad spectrum of successful traders. This chapter contains a list of 50 observations regarding success in trading drawn from the lessons I learned and insights I developed in the process of interviewing great traders over several decades—an endeavor chronicled in four Market Wizards books.

1. First things first. First, be sure that you really want to trade. It is common for people who think they want to trade to discover that they really don’t.
2. Examine your motives. Think about why you really want to trade. If you want to trade for the excitement, you might be better off riding a roller coaster or taking up hang gliding. If you are drawn to trading because you think it is an easy way to make a lot of money, the markets are likely to disabuse you of that assumption.
3. There is no holy grail in trading. Many traders ...