History's Greatest Speculators

History's Greatest Speculators

Trading Rules of the Millionaires

To profit from this report it is imperative to read it before making every trading or investment decision. The rules apply equally to both stocks and commodities. While you read the report keep the following trading rules in mind and think of which quote applies to which rule. Good luck.

Jesse Livermore, son of a poor dirt farmer, made 4 multi-million dollar fortunes. In 1929 just after the "Crash"-- he made over 100 million dollars. Arthur Cutten, an immigrant with only fifty dollars, made 5 million dollars. Bernard Baruch became a millionaire by the age of thirty-five. Larry Hite started and now operates an 800 million-dollar fund. Richard Dennis ran a small $400 stake into an estimated $200,000,000!

#1 FOLLOW THE TREND

"Whatever method you use to enter trades, the most critical thing is that there is a major trend, your approach should assure that you get in that trend." Richard Dennis, Market Wizards, Jack D. Schwager

"I never buy on reactions or go short on rallies. One other point: It is foolhardy to make a second trade, if your first trade shows you a loss. Never average losses. Let that thought be written indelibly upon your mind." Jesse L. Livermore, How to Trade in Stocks

#2 CUT LOSSES SHORT

"I should have had to be pretty dull not to discover that the way to make money was to be quick as possible in taking a loss, but to be slow in taking profits; rather, to let these pile up as high as they would go." Arthur W. Cutten, The Story of a Speculator

"Always close out what shows you a loss and keep what shows you a profit." Jesse L. Livermore, Reminiscence of a Stock Operator, Edwin Lefevre

"No speculator can be right all the time. In fact, if a speculator is correct half of the time he is hitting a good average. Even being right three or four times out of ten should yield a person a fortune if he has the sense to cut his losses quickly on ventures where he has been wrong." Bernard M. Baruch My Own Story

#3 LET PROFITS RUN

"After spending many years on Wall Street, and after making and losing millions of dollars, I want to tell you this: It never was my thinking that made the big money for me. It was my sitting. Got that? My sitting tight!" Jesse L.

Livermore, Reminiscence of a Stock Operator, Edwin Lefevre

"I knew scalping would never make me rich, and so I was constantly striving to sense the broad swings of the market and to understand the reasons for them." "Most of my success has been due to my hanging on while my profits mounted. There is the big secret. Do with it what you will." Arthur W. Cutten, The

Story of a Speculator

#4 BET SMALL

"Keeping your risk small and constant is absolutely critical." Larry Hite, Market Wizards, Jack D. Schwager

"Frequently, I know, I have been restrained from taking some too bold action because of the excessive risk to my fortune. This is an emotional control, but it is an effective one. It concerns profit." Arthur W. Cutten, The Story of a

Speculator

#5 MAKE YOUR OWN DECISIONS

"Beware of barbers, beauticians, waiters-of anyone-bringing gifts of "inside" information or "tips". "Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth." Bernard Baruch, My Own Story

"Markets are never wrong; opinions are." Jesse Livermore, Speculator King

151 Of the Fastest Cashing Producing Secrets Known to Traders

SECRET #1 "Don't focus on making money; focus on protecting what you have." Paul Tudor Jones, Market Wizards, Jack D. Schwager

SECRET #2 "Almost without exception, there is only one way to make a great deal of money in the business world-and that is in one's own business. The man who wants to go into business for himself should choose a field which he knows and understands. Obviously, he can't know everything there is to know from the very beginning, but he should not start until he has acquired a good, solid working knowledge of the business." J. Paul Getty, How To Be Rich

SECRET #3 "I know of a few millionaires who started trading with inherited wealth. In each case, they lost it all because they didn't feel the pain when they were losing. In those formative first years of trading, they felt they could afford to lose. You're much better off going into the market on a shoestring, feeling that you can't afford to lose. I'd rather bet on somebody starting out with a few thousand dollars than on somebody who came in with millions... This is one of the few industries where you can engineer a rags-to-riches story. Richard Dennis started out with only hundreds of dollars and ended up making hundreds of millions in less than two decades - that's quite motivating." William Eckhardt, famous trader

SECRET #4 "Knowledge will not attract money, unless it is organized, and intelligently directed, through practical plans of action, to the definite end of accumulation of money. Lack of understanding of this fact has been the source of confusion to millions of people who falsely believe that "knowledge is power." It is nothing of the sort! Knowledge is only potential power. It becomes power only when, and if, it is organized into definite plans of action and directed to a definite end." Napoleon Hill, Think & Grow Rich

SECRET #5 "That cotton trade was almost the deal-breaker for me. It was at that point I said, "Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?" "That was when I first decided I had to learn discipline and money management. It was a cathartic experience for me, in the sense that I went to the edge, questioned my very ability as a trader, and decided that I was not going to quit. I was determined to come back and fight. I decided that I was going to become very disciplined and businesslike about my trading." Paul Tudor Jones, Market Wizards, Jack D. Schwager

SECRET #6 "Your loss of confidence is the greatest loss you can suffer." "Once you lose your confidence, you are unable to reason clearly. You are, then afraid to buy or sell even though your charts show a potential "special situation" is developing." R.C. Allen, Professional Trading System

SECRET #7 "One cannot be successful by speculating every day or every week; that there are only a few times a year, possibly four or five, when you should allow yourself to make any commitment at all. In the interim you are letting the market shape itself for the next big movement." "Remember this: When you are doing nothing, those speculators who feel they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes." Jesse L. Livermore, How To Trade In Stocks

SECRET #8 "Every day a "special situation" is developing in some commodity that can help you build a fortune. When that opportunity comes, you must then have the courage to make a decision and act." R.C. Allen, How To Build A Fortune In Commodities

SECRET #9 "Frequently, I know, I have been restrained from taking some too bold action because of the excessive risk to my fortune. This is an emotional control, but it is an effective one. It concerns profit." Arthur W. Cutten, The Story of a Speculator

SECRET #10 "I haven't seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few are not. Many outstandingly intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important." William Eckhardt, famous trader

SECRET #11 "Take that TV set, put it in the closet." W.G. Hill, Think Like A Tycoon

SECRET #12 "I have never entirely divested myself of this habit of hero-worship. My experience has taught me that the next best thing to being truly great is to emulate the great, by feeling and action, as nearly as possible." Napoleon Hill, Think & Grow Rich

SECRET #13 "Because it is like any job, if you stand there long enough, you have to pick it up. It is just a matter of how long you can afford to stand there before you do." Tom Baldwin, Market Wizards, Jack D. Schwager

SECRET #14 "When I studied the lives and fortunes of the two dozen millionaires, I was looking for a common denominator: Something they all had or did that accounted for their success. I finally noticed factors that were present in almost every fortune. I slowly eliminated those factors that didn't show up in every case. What I ended up with was basic and somewhat obvious, although it escapes 96 percent of those who look for it. There are four essential ingredients, and I put them into a formula: PSIC, which simply translates into P = Plan, S = Save, I = Invest, C = Compound." Mark O. Haroldsen, "How To Wake Up The Financial Genius Inside You

SECRET #15 "The greatest gambling game on earth is the one played through the brokerage houses across the country." "The similarity between the casinos and the brokerage houses is striking. The customers' men are the croupiers. The commissions correspond to the house percentage. The board rooms are the casinos themselves. The stock exchanges and the ticker tape are the gambling devices. The superstitions, unfounded slogans, and sayings of Wall Street correspond to those of the gamblers." Edward O. Thorp, Beat The Dealer

SECRET #16 "I never gamble." J.P. Morgan, R.C. Allen, How To Build A Fortune In Commodities

SECRET #17 "Without doubt, the most common weakness of all human beings is the habit of leaving their minds open to negative influence of other people." Napoleon Hill, Think & Grow Rich

SECRET #18 "For one thing, we usually act too quickly when we are trying to make money and too slowly when we are trying to protect our money. When you are pressed to make a decision, ask yourself, "Am I doing this to protect my money or to make more money?" If the answer is to protect money, act more quickly. If the answer revolves around making more money-act slowly." Larry Williams, How I Made One Million Dollars Last Year Trading Commodities

SECRET #19 "That haphazard reliance on advice from brokers is one of the reasons why the record shows that, over the past 50 years or more, 90% of the people who trade in commodities still lose money." "Their job, as brokers, is to fill orders and try to stimulate business from new and old customers. This does not allow them enough time in a four to five hour day to, also, be competent analysts and advisors." R.C. Allen, Professional Trading System

SECRET #20 "Beware of barbers, beauticians, waiters-of anyone-bringing gifts of "inside" information or "tips." Bernard Baruch, My Own Story

SECRET #21 "Markets are never wrong; opinions are." Jesse Livermore, Speculator King

SECRET #22 "The world is ruled, and the destiny of civilization is established, by human emotions. People are influenced in their actions, not by reason so much as by feelings." Napoleon Hill, Think & Grow Rich

SECRET #23 "Market action is human nature in action." "The greatest actuating force in a capitalistic country is mass emotion." "This reaches its greatest intensity under the driving force of two unchanging human traits, The Desire For Gain or The Fear Of Loss. "Men are impelled far more by emotions than by intellect. "Fear grows with the swiftness of a contagion. Confidence develops like the slow blooming of a rose. Both are phases of human nature." "Basic human nature does not change. This fact is of enormous value to the investor, because it leaves intact the two great major trends." "And you will note they do not tarry near the centerline of fair values. That is not human nature. People are prone to be extravagantly optimistic or dolefully in the dumps. Stocks and wheat are constantly racing between the "pink tops" and the "blue bottoms," from one extreme to the other. They will always be doing this, and in this action is unlimited wealth for the men who realize this fact and will use it with confidence and decision." Burton H. Pugh, A Better Way To Make Money

SECRET #24 "Not having a financial background, I was unfamiliar with the term "blue chip," but it sounded odd to me in the context of a staid investment firm. So after the interview, I looked up its derivation. I found that the origin of the term could be traced to the color of the most expensive chip in Monte Carlo. "Aha, now I know what this game is all about-gambling." I threw away my copy of Graham and Dodd [Principles of Security Analysis, considered by many to be the "bible" of stock market analysis] and bought a book called Beat the Dealer. I came away with the idea that successful investment was really a matter of odds, and if you could compute the odds, you could find and test methods that could beat the market." Larry Hite, Market Wizards, Jack D. Schwager

SECRET #25 "Trading in the markets is an odds game, and the object is always keep the odds in your favor." Victor Sperandeo, Methods of a Wall Street Master

SECRET #26 "If you apply the same principles of poker strategy to trading, it increases your odds of winning significantly. I have always tried to keep the concept of patience in mind by waiting for the right trade, just like you wait for the percentage hand in poker. If a trade doesn't look right, you get out and take a small loss; it's precisely equivalent to forfeiting the ante by dropping out of a poor hand in poker. On the other hand, when the percentages seem to be strongly in your favor, you should be aggressive and really try to leverage the trade similar to the way you raise on the good hands in poker." Gary Biefeldt, Market Wizards, Jack D. Schwager

SECRET #27 "Without a doubt improper Money Management is the downfall of most beginning Blackjack players. They falsely believe that because they have an advantage, there is no way they can lose no matter how much they invest. "This is wrong. Even with a long run advantage you can still lose. If you over bet, you can easily lose your entire bankroll. Over betting is the major reason there are so few successful novice card counters in operation in today's casinos. "It is important to realize that in order to double your bankroll you must bet in accordance with your advantage. To over bet or under bet is disastrous. The object is to double your bankroll as fast as possible with the least amount of risk." Bobby Singer, The Bobby Singer Method

SECRET #28 "Keeping your risk small and constant is absolutely critical." Larry Hite, Market Wizards, Jack D. Schwager

SECRET #29 "I intend to risk below 5 percent on a trade, allowing for poor executions. Occasionally I have taken losses above that amount when major news caused a thin market to jump through my stops." Ed Seykota, Market Wizards, Jack D. Schwager

SECRET #30 "Whatever amount of capital you use to trade with, follow this rule: Divide your capital into 10 equal parts and never risk more than 10 per cent of your capital on any one trade. Should you lose for three consecutive times, then reduce your trading unit and only risk 10 per cent of your remaining capital." W. D. Gann, How To Make Profits Trading In Commodities

SECRET #31 "If the player loses, his betting levels are reduced automatically. He theoretically has no chance of tapping out, that is, he has a zero percent element-of-ruin. If the bank is increased through winning, the player automatically bets higher." Ken Uston, Million Dollar Blackjack

SECRET #32 "No speculator can be right all the time. In fact, if a speculator is correct half of the time he is hitting a good average. Even being right three or four times out of ten should yield a person a fortune if he has the sense to cut his losses quickly on ventures where he has been wrong." Bernard M. Baruch, My Own Story

SECRET #33 "There are really four kinds of trades or bets: good bets, bad bets, winning bets, and losing bets. Most people think that a losing trade was a bad bet. That is absolutely wrong. You can lose money even on a good bet. If the odds on a bet are 50/50 and the payoff is $2 versus a $1 risk, that is a good bet even if you lose. The important point is that if you do enough of those trades or bets, eventually you have to come out ahead." Larry Hite, Market Wizards, Jack D. Schwager

SECRET #34 "Don't ever average losers. Decrease your trading volume when you are trading poorly; increase your volume when you are trading well." Paul Tudor Jones, Market Wizards, Jack D. Schwager

SECRET #35 "My hot-shot trading friends always push their luck to the hilt, constructing all kinds of fancy pyramid plans to make them millions of dollars. They think I'm a bit square. I don't swing money around the way they do. My pyramid plan is to be square. They think I'm too conservative, and maybe I am. But, I think I have the last laugh because they have yet to make any money in the market let alone the million dollars that I've made." Larry Williams, How I Made One Million Dollars Last Year Trading Commodities