Quotes from Jack D. Schwager

Now it's no longer sufficient to assume that because you trade with the trend, you'll make money. Of course, you still need to be with the trend, because it puts the percentages in your favor, but you also have to pay a lot more attention to where you're getting in and out.

So, one of your shortcomings has been in letting your rational assessment of a situation keep you from participating in a psychologically driven trade. Yes, failing to participate in markets when the fundamentals are less important than the psychology. But how do you recognize that type of situation? Well, that's the key question, isn't it? [He laughs.]

If trading (or any other job or endeavor) is a source of anxiety, fear, frustration, depression, or anger, something is wrong—even if you are successful in a conventional sense

internal trend lines are far more useful than conventional trend lines in defining potential support and resistance areas.

Those who want to win and lack skill can get someone with skill to help them. I

Big market price changes happen when lots of people are forced to reevaluate their prejudices, not necessarily when the world actually changes. — Colm O'Shea

The perspective I have on it now is that when I was trading my own account, it was like trading monopoly money. My trading capital was just something I kept score with. I detached myself emotionally from it.

Failure Is Not Predictive

I have what I call my Evel Knievel screen. These are companies that are trying to jump the Grand Canyon and probably won't make it. There are only two conditions for the screen. First, the company is trading at more than five times book value. Second, the company is losing money. My job is to figure out which stocks won't make it across the Grand Canyon and then go short those stocks.

I find that major trends are now frequently preceded by a sharp price change in the opposite direction. I still make my judgments as to probable price trends based on overall market action, as I always did. However, with a few exceptions, I now buy on breaks and sell on rallies.

The worst thing that can happen to you in the markets is being right and still losing money. That's the danger in buying on rallies and selling on breaks these days.

You can use charts to give you a plus or minus toward your view, but you can never start with the chart.

In trading, 80 percent of your profits come from 20 percent of your ideas.

The first rule of trading—there are probably many first rules—is don't get caught in a situation in which you can lose a great deal of money for reasons you don't understand.

You have to be willing to make mistakes regularly; there is nothing wrong with it.

Whenever I enter a position, I have a predetermined stop.

I learned that if you shoot for what you want, you stand a much better chance of getting it because you care much more.

The best trades are the ones in which you have all three things going for you: fundamentals, technicals, and market tone.

The next thing I would advise is to always use stops.

The first thing I would say is always bet less than 5 percent of your money on any one idea.

Another thing is that if a position doesn't feel right as soon as you put it on, don't be embarrassed to change your mind and get right out.

Perhaps the most important rule is to hold on to your winners and cut your losers. Both are equally important. If you don't stay with your winners, you are not going to be able to pay for the losers.

When the news is wonderful and a market can't go up, then you want to be sure to be short.

Albert Einstein said that the single most important question is whether the universe is friendly. I think it is important for everybody to come to a point where they feel inside that the universe is friendly.