History's Greatest SpeculatorsTrading 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, TheStory 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 aSpeculator

#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

SECRET #36 "You can risk 1 percent of your capital, you can risk 5 percent, or you can risk 10 percent, but you better realize that the more you risk, the more volatile the results are going to be." Ed Seykota, Market Wizards, Jack D. Schwager

SECRET #37 "The market being in a trend is the main thing that eventually gets us in a trade. That is a pretty simple idea. Being consistent and making sure you do that all the time is probably more important than the particular characteristics you use to define 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

SECRET #38 "(6) Don't pick tops and bottoms, let them pick themselves. (7) Don't step in front of freight trains." Welles J. Wilder, The Adam Theory Of Markets Or What Matters Is Profit

SECRET #39 "The reason I am nevertheless willing to increase my exposure is that I believe the scope for a reversal has diminished. One of the generalizations I established about freely floating exchange rates is that short-term volatility is greatest at turning points and diminishes as a trend becomes established." George Soros, The New Money Masters, John Train

SECRET #40 "Once a trend gets started it becomes a habit. The saying "Big ships turn slowly" is especially applicable to the foreign exchange market-the biggest ship in the world." Andrew Krieger, The Money Bazaar

SECRET #41 "Over the years, hundreds of thousands of people have lost millions of dollars because they traded at one time or another, in a way that disregarded these two rules-hoping to "scalp" the market or try to gamble against the trend-UP or DOWN.

"When a "bull market" begins never-never sell when prices are trading above the 4 day, 9 day and 18 day moving averages. (This means you must be "long" and looking for higher prices and you must never take profits on your "long positions" until a top has been indicated.) Regardless of news or fundamentals. "When a "bear market" begins never-never buy when prices are trading below the 4 day, 9 day and 18 day moving averages. (This means you must be "short" and looking for lower prices and you must never take profits on your "short sales" until a bottom has been indicated.) Regardless of news or fundamentals." R.C. Allen, Professional Trading System

SECRET #42 "Rome was not built in a day," and no real movement of importance ends in one day or in one week. It takes time for it to run its logical course. It is significant that a large part of a market movement occurs in the last forty-eight hours of play, and that is the most important time to be in it." Jesse L. Livermore, How To Trade In Stocks

SECRET #43 "In fact, if you select the right commodity, then stay with a definite trend-UP or DOWN-and earn large profits five or six times every year, your profits for the year could run as high as 700% or more." R.C. Allen, Professional Trading System

SECRET #44 "There is only one side of the market, and it is not the bull side or the bear side, but the right side." Jesse L. Livermore, Reminiscences Of A Stock Operator, Edwin Lefevre

SECRET #45 "The Bull Market Law-Or Habit; A major advance or bull market in stocks or commodities divides into a first or slow half, followed by a fast or finishing half." "The Bear Market Law-Or Habit; A major decline or bear market divides into a first or fast phase, followed by a slower finishing phase." Burton H. Pugh, A Better Way To Make Money

SECRET #46 "The price of virtually all futures and cash markets is affected by weather, season, and growing conditions, because supply and demand are closely related to seasonal fluctuations. A seasonal pattern is the tendency of a given futures market to trend in a given direction at certain times of the year." Jake Bernstein, High Performance Futures Trading, Joel Robbins

SECRET #47 "Well, prices do fluctuate and anyone has a right to seek the cause. I can say this-that always the reasons, when revealed, are seen to be simple and logical. I have a copy of a chart wider than a man can reach which shows graphically the fluctuations in the price of wheat during more than five centuries. It was prepared by George Broomhall, the British statistical authority on grain. Sometimes I have thought this chart would make an excellent mural decoration for the walls of the chambers where Congress sits. Even if its modernistic angles should be out of place, at least the members might discover from daily contemplation that the greatest of bull influences is war, and the greatest of bear influences, the end of war." Arthur W. Cutten, The Story of a Speculator

SECRET #48 "Most commodities spend about 70% of their time each year in those indecisive trading markets. At such times, they should be left alone. They are not worth the time and effort. And, too often, you wind up with losses." "During the remaining 30% of the time, large profits are possible. Eventually, a "special situation" is created. Prices will break out of the trading range-either up or down-you will then have an opportunity to earn a tremendous amount of money in only a few weeks." R.C. Allen, How To Build A Fortune In Commodities

SECRET #49 "In a narrow market when the prices are not getting anywhere to speak of, but move within a narrow range, there is no sense in trying to anticipate the next big movement, whether it is going to be up or down. The thing to do is watch the market to determine the limits of the get-nowhere prices and make up your mind that you will not take an interest until prices break through the limits in either direction." Jesse L. Livermore, A Treasury Of Wall Street Wisdom, Harry D. Schultz & Samson Coslow

SECRET #50 "For example-a very successful trader once told me-"I made my fortune because I never tried to buy at the bottom nor sell at the top. I was satisfied to buy when values were, generally, high-without regards to final tops or final bottoms-which no one can know or identify until after they have been definitely made. And, except by some lucky "guesses", they are impossible to ascertain." R.C. Allen, Professional Trading System

SECRET #51 "When a stock starts sliding downward, no one can tell how far it will go. Nor can anyone guess the ultimate top on a stock in a broad upward movement. A few thoughts should be kept uppermost in mind. One is: Never sell a stock, because it seems high-priced. You may watch the stock go from 10 to 50 and decide that it is selling at too high a level. That is the time to determine what is to prevent it from starting at 50 and going to 150 under favorable earning conditions and good corporate management. Many have lost their capital funds by selling a stock short after a long upward movement, when it "seemed too high." "Conversely, never buy a stock because it has had a big decline from its previous high. The likelihood is that the decline is based on a very good reason. That stock may still be selling at an extremely high price-even if the current level seems low. Try to forget its past range and study it on the basis of the formula which combines timing and price." Jesse L. Livermore, How To Trade In Stocks

SECRET #52 "It may surprise many to know that in my method of trading, when I see by my records that an upward trend is in progress, I become a buyer as soon as a stock makes a new high on its movement, after having had a normal reaction. The same applies whenever I take the short side. Why? Because I am following the trend at the time. My records signal me to go ahead!" "I never buy on reactions or go short on rallies." Jesse L. Livermore, How To Trade In Stocks

SECRET #53 "The majority of people have a habit when they buy or sell a stock, of fixing in their minds a certain figure at which they expect to take profits. There is no reason for this. It is simply a bad habit based on hope. When you make a trade, your object should be to make profits and there is no way that you can determine in advance how much profit you can expect on any one particular trade. The market itself determines the amount of your profit, and the thing that you must do is to be ready to get out and accept a profit whenever the trend changes, and not before." William D. Gann, A Treasury Of Wall Street Wisdom, Harry D. Schultz & Samson Coslow

SECRET #54 "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

SECRET #55 "The Farm Board was wrong, and with a half a billion dollars has brought a piece of information that most of us who understand commodity trading acquired at less expense. Joe Leiter learned it in 1898. He tried to dictate the price of wheat and was ruined by a new crop. His teacher that time was old P. D. Armour. The bill-about $9,000,000-was paid by his father Levi Z. Leiter. Other men have learned the same lesson and some of them have been ruined in the process. That lesson is that none can dictate prices who cannot also control production." "It is not speculators who put markets up and down. It is supply and demand." Arthur Cutten, The Story of a Speculator

SECRET #56 "The economy is definitely the single most important factor. Four other important elements are inflation expectations, the dollar, the trade balance, and the budget deficit." Gary Biefeldt, Market Wizards, Jack D. Schwager

SECRET #57 "Since the profit potentials are closely linked to the inflation cycles, it is necessary to understand the causes of inflation." "An investment strategy that fully utilizes the forces of inflation can, no doubt, be very rewarding." Joseph D. Hadad, An Aggressive Campaign for Automatic Commodity Trading

SECRET #58 "As for the price patterns, there are many that have been found, over the years, to occur over and over again in the same shape. The shape of these patterns and the type of price movement that usually follows have been observed to be so consistent that they have predictive value for the experienced chartist." Alexander P. Paris, A Complete Guide To Trading Profits

SECRET #59 "The other important and quite valid claim of the chartist is that timing is immediately improved by the use of charts even if used in conjunction with fundamental analysis. Charts don't tell you which stocks are good and sound or which should move, but instead tell you which stocks are moving, which ones will move, and how far they are likely to move in the short term. This is, of course, what the trader really wants to know. Fundamental analysis will give the analyst any number of stocks that should move but only technical analysis will tell him when they will move." Alexander P. Paris, A Complete Guide To Trading Profits

SECRET #60 "Now if you just do the following when entering and exiting a trade based on weekly price charts, it becomes very difficult to trade against the major trend. "Initiating a long position: Buy bottoms that are preceded by lower bottoms and exit long trades on tops that are preceded by lower tops. "Initiating a short position: Sell tops that are preceded by higher tops and exit short trades on bottoms that are preceded by higher bottoms. "The reason I suggested weekly price charts is because the shorter your time frame, the less reliable or significant your tops and bottoms on charts become." Kelly Angle, 100 Million In Profits

SECRET #61 "1. Whenever the price exceeds the highs of the four preceding full calendar weeks' ranges, buy and cover short positions. 2. Whenever the price falls below the low of the four preceding calendar weeks' ranges, liquidate long positions and sell short." "If you doubt the value of the two- or four-week rule, take a commodity price chart and test the method yourself. It is one of the best, and simplest, trend-following methods yet developed." George Angell, Winning in the Futures Market

SECRET #62 "Many years ago I began profiting from the simplest type of Pivotal Point trades. Frequently I had observed that when a stock sold at 50, 100, 200 and even 300, a fast and straight movement almost invariably occurred after such points were passed." "Bear in mind when using Pivotal Points in anticipating market movements, that if a stock does not perform as it should, after crossing the Pivotal Point, this is a danger signal which must be heeded." Jesse L. Livermore, How To Trade In Stocks

SECRET #63 "There are certain other levels which may at times evidently produce considerable resistance or support without any reference to a previous "vested interest." We have in mind the "round" figures 20, 30, 50, 75, 100 etc." Robert D. Edwards and John Magee, Technical Analysis of Stock Trends

SECRET #64 "Livermore listed two major points for success: 1. Sensitiveness to mob psychology. 2. Willingness to take a loss." Harry D. Schultz & Samson Coslow, A Treasury Of Wall Street Wisdom

SECRET #65 "Don't judge the news. Learn to judge the market's reaction to the news and you will be able to master any fundamental news stories." Larry Williams, How I Made One Million Dollars Last Year Trading Commodities

SECRET #66 "I made a lot of money going short sugar at 60 cents, but I lost much more going long sugar at 6 cents." "You throw it in. Because how do you know? Maybe it is going to 2 cents; maybe it is going to 1 cent." "The idea that one side of the market is much more likely to work in the absence of anything else is an illusion. The market just

wouldn't be there if that was true. There were plenty of guys who went short soybeans at $4 in 1973, because just like sugar at 4 cents couldn't go any lower, beans at $4 couldn't go any higher. Well, not only did they go higher, they went to a high of $12.97 in a matter of four or five months. "There is another point that I think is important: You should expect the unexpected in this business; expect the extreme. Don't think in terms of boundaries that limit what the market might do. If there is any lesson I have learned in the nearly twenty years that I've been in this business, it is that the unexpected and the impossible happen every now and then." Richard Dennis, Market Wizards, Jack D. Schwager

SECRET #67 "Accepting losses is the most important single investment device to insure safety of capital. It is also the action that most people know the least about and that they are least liable to execute." "The most important single thing I learned is that accepting losses promptly is the first key to success." "The difference between the investor who year in and year out procures for himself a final net profit, and the one who is usually in the red, is not entirely a question of superior selection of stocks or superior timing. Rather, it is also a case of knowing how to capitalize successes and curtail failures." Gerald M. Loeb, The Battle for Investment Survival

SECRET #68 "The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses." Ed Seykota, Market Wizards, Jack D. Schwager

SECRET #69 "Somebody once asked me, "How could the Hunts lose? They were worth billions." Let's say you have a billion dollars, and you buy $20 billion worth of silver-I am making these numbers up for the sake of the example-you are in exactly the same risk position as the guy with $1,000 who owns $20,000 worth of silver." Larry Hite, Market Wizards, Jack D. Schwager

SECRET #70 "I have a friend who has amassed a fortune in excess of $100 million. He taught me two basic lessons. First, if you never bet your lifestyle, from a trading standpoint, nothing bad will ever happen to you. Second, if you know what the worst possible outcome is, it gives you tremendous freedom. The truth is that, while you can't quantify reward, you can quantify risk." Larry Hite, Market Wizards, Jack D. Schwager

SECRET #71 "After all is said and done, you have to minimize your losses and try to preserve capital for those few instances when you can make a lot of money in a very short period of time. What you can't afford to do is throw away your capital on suboptimal trades. If you do, you will be too debilitated to trade when the right position comes along. Even if you put the trade on, it will be relatively small because your capital will have been depleted by the other trades." Richard Dennis, Market Wizards, Jack D. Schwager

SECRET #72 "If you want to be a successful trader, small losses should always be expected. It is the large losses you must guard against." R.C. Allen, How To Build A Fortune In Commodities

SECRET #73 "I don't risk significant amounts of money in front of key reports, since that is gambling, not trading." "The most important rule of trading is to play great defense, not great offense. Every day I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum possible drawdown." Paul Tudor Jones, Market Wizards, Jack D. Schwager

SECRET #74 "If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in. There is nothing better than a fresh start." Paul Tudor Jones, Market Wizards, Jack D. Schwager

SECRET #75 "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

SECRET #76 "It is better to "average up" than to "average down." This opinion is contrary to the one commonly held and acted upon: it being the practice to buy, and on a decline to buy more. This reduces the average. Probably four times out of five this method will result in striking a reaction in the market that will prevent loss, but the fifth time, meeting with a permanently declining market, the operator loses his head and closes out, making a heavy loss - a loss so great as to bring complete demoralization, often ruin." Dickson G. Watts, Speculation as a Fine Art

SECRET #77 "In the stock market the first loss is usually the smallest. One of the worst mistakes anyone can make is to hold on blindly and refuse to admit that his judgement has been wrong. "Many a novice will sell something he has a profit in to protect something in which he has a loss. Since the good stock usually has gone down least, or may even show a profit, it is psychologically easy to let go. With a bad stock the loss is likely to be heavy and the impulse is to hold on to it in order to recover what has been lost. "Actually, the procedure one should follow is to sell the bad stock and keep the good stock. With rare exceptions, stocks are high because they are good, and stocks are low because they are doubtful value." Bernard Baruch, My Own Story

SECRET #78 "Whenever he found himself wrong he could run out of the market like a scared cat. That was one of the reasons he was successful. He knew he could not make a market go his way by being stubborn." Arthur W. Cutten, The Story of a Speculator

SECRET #79 "Few people have the character, mental stability or the courage to take small losses. If you are one of the few who can do this, you will then stand an excellent

chance of earning 360% or more every year." R.C. Allen, How To Build A Fortune In Commodities

SECRET #80 "If you trade, you must use stops. The most common method of placing stops around prices breaking through what should have been a support area. This is certainly nothing new. If prices fall below yesterday's low, or the lowest low of the last four days, many "systems" would stop you out. "My method uses stops in two ways. One is based on price, the other on time. "When carefully studying your chart, searching for a stop point, you must realize that others are doing the same thing. The rest of the traders will usually place stops slightly below the supposed support area. "Realizing this, I place my stop order just a little bit lower than where I suspect other people have placed theirs. I am thereby assured. "If they are going to get me, they're going to have to take a lot of other people along first." "A second price method is ideal for the system trader or beginner. This method dictates that you will not take more than a $400 loss on any one contract trade. "Such a plan is clean and simple. All you need do is tell your broker where to place the stop in terms of dollars risk. For the novice, or person who lacks discipline, this is the very best possible system. "You can also stop yourself out of a commodity by demanding it perform within a certain time period. If it does not, you get out of it, automatically. Let's say you buy Wheat on Monday. If the move for which you are looking has not begun by Thursday, I suggest you get out. This means you are using a four day stop. The commodity must start the projected move in four days or there is an indication that something is not right and you'll have to move back to the sidelines. After carefully studying thousands of charts and making thousands of trades, I have come to the conclusion the four day time period is the optimum span to use for time stops. Waiting any longer can get you into serious trouble. Not allowing that much time will get you out too soon." Larry Williams, How I Made One Million Dollars Last Year Trading Commodities

SECRET #81 "Many traders say they use mental stops. This means, when a trader concludes a price has fallen to a level they consider risky, they begin selling. Here, the advantage lies in the fact your stop is known only to you, not floor brokers. In theory, this sounds fine. However, I do not know of anyone that has successfully used mental stops. As prices smash down to the mental selling level, we begin to re-evaluate and , in the process, fail to use the mental stop." Larry Williams, How I Made One Million Dollars Last Year Trading CommoditiesSECRET #82 "It would be simple to run down the list of hundreds of stocks which, in my time, have been considered gilt-edged investments, and which today are worth little or nothing." Jesse L. Livermore, How To Trade In Stocks

SECRET #83 "I also learned that a certain amount of loss will affect your judgement, so you have to put some time between that loss and the next trade." Richard Dennis, Market Wizards, Jack D. Schwager

SECRET #84 "It does not matter if they are paper when you lose them. When you lose you sweat blood." Arthur W. Cutten, The Story of a Speculator

SECRET #85 "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

SECRET #86 "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." Arthur W. Cutten, The Story of a Speculator

SECRET #87 "Efforts to day trade, "scalp the market" or attempt to earn small profits are not wise. Those who trade in that manner earn very little money and, eventually, most of them lose. The small profits are not worth the great amount of time and effort necessary to trade so often. It is wiser to relax, take it easy and trade only once or twice each month so you can be certain of earning 360% or more per year." R.C. Allen, How To Build A Fortune In Commodities

SECRET #88 "Studying my winning plays in Fullerton's office I discovered that although I often was %100 right on the market-that is, in my diagnosis of conditions and general trend-I was not making as much money as my market "rightness" entitled me to. Why wasn't I? "There was as much to learn from partial victory as from defeat. "For instance, I had been bullish from the very start of a bull market and I had backed my opinion by buying stocks. An advance followed, as I had clearly foreseen. So far, all very well. But, what else did I do? Why, I listened to the elder statesmen, and curbed my youthful impetuousness. I made up my mind to be wise and play carefully, conservatively. Everybody knows that the way to do that was to take profits and to buy back your stocks on reactions. And that is precisely what I did, or rather what I tried to do; for I often took profits and waited for a reaction that never came. And I saw my stock go kiting up ten points more and I sitting there with my four-point profit safe in my conservative pocket. They say you never go poor taking profits. No, you don't. But, neither do you grow rich taking a four-point profit in a bull market. "Where I should have made twenty thousand dollars, I made two thousand. That's what my conservatism did for me." "I did precisely the wrong thing. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold out. Of all speculative blunders there few greater than trying to average a losing game. Always sell what shows you a loss and keep what shows you a profit." "I think it was a long step forward in my education when I realized at last that when old Mr. Partridge kept on telling the other customers, "Well, you know this is a bull market!" he really meant to tell them that the big money was not in the individual fluctuations but in the main movements-that is, not in reading the tape but in sizing up the entire market and its trend. "And right here let me say one thing: 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! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets, and lots of early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And, their experience invariably matched mine-that is, they made no real

money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade, than hundreds did in the days of his ignorance." Jesse L. Livermore, Reminiscences Of A Stock Operator, Edwin Lefevre

SECRET #89 "It is almost an appalling fact that the practice of the public is to accept a profit of two or three points, but to stand for a loss ranging from ten to thirty points, and sometimes fifty or a hundred points. This means that the public reverses one of the first principles in successful stock trading which is: cut your losses and let your profits run. "Nearly all the successful operators of the past fifty or sixty years have adopted and preached this principle. It was a by-word of Jim Keene's; it was followed by Cammack; it was practiced by Dixon G. Watts, who was one of the most successful cotton speculators ever known; it was advocated by E.H. Harriman, who was once a floor trader, and who said: "If you want to be successful in trading, kill your losses; try to keep them down to three-eighths of a point but never risk more than one point," (Of course, Harriman said this from a floor trader's standpoint; such close trading is not possible to anyone who pays commissions and trades from an office). "These great operators also followed the rule of letting their profits run. Many of them pyramided their profits, which is the same thing more intensively applied." "What I try to do," said he, in explaining to me his methods, "is to make my original commitment as close as I can to the danger point. After making it, I watch to see if that danger point is approached; or I may close the trade out sooner because I think I am wrong; but once the stock moves several points away from the figure where I bought or sold it, I pay little attention to it until it is time to close the trade. "He seldom risks more than a few points, which means that the closer to the danger point he can start his operation, the less he ventures." "The relation between the amount of his theoretical risk and the size of his minimum anticipated profit, is a very interesting point and one which most of the public seems to overlook." "Mr Livermore tells me, that he never makes a trade unless he sees at least a probable ten points profit. Of course, many of his profits are much larger than this." "But in setting a minimum of ten points as his objective, it will be seen that he is leaving room for one or two losses out of three trades, without extinguishing all the profit he endeavors to secure on the third trade. "I do not mean by this that he is an active trader, for as I have explained, he usually takes a position and waits for an important swing." "The point is that he usually makes a practice of cutting his losses according to the well-tried rule, and when a stock does move in his favor he lets his profit run until, in many instances, it reached sizeable proportions. The ratio of profit, measured in points, is therefore greater than ten to three or ten to five. The original risk on a trade may have been, say four points, although it may show a profit of twenty points-a ratio of two to ten-or even more than that." "Take the methods followed by any successful operator, turn them inside out, and you will learn why the public in general is unsuccessful. The public will usually take a three points profit and stand for ten-point loss. Livermore takes a three-point loss and plays for a ten-point profit. A loss of three or four points to him means danger." "One of the simplest rules and at the same time one of the hardest to learn, is this practice of cutting losses short. If everyone who trades in stocks would systematically close out his losing trades once a day, once a week, or once a month, or a

time when a certain number of points loss are indicated, the way would be paved to his success in trading, provided he has the patience to hold on for a substantial profit when a stock does go his way. "These two rules are probably the most important keys to the success not only of Mr. Livermore, but of every other big operator whose dealings have attained the spectacular." Richard D. Wyckoff, Jesse Livermore's Methods of Trading In Stocks

SECRET #90 "The first jolt I had that day was a call for half a million dollars in margin. I arranged for it and then listened to the bad news from the next Chicago broker who was waiting on the wire; and so it went. There would be no thrill in winning if you never lost, and during that break I surely stored up pain for a lot of future thrills. The range of wheat that month was sixty cents. The whole trouble with me that time was that I had stayed too long. I had believed wheat would go to $2.50, but I was mistaken. I have overstayed the market at other times, but this is not, for me, really a failing. 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

SECRET #91 "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth-or the first. These two are the most expensive eighths in the world." Jesse L. Livermore, Reminiscences Of A Stock Operator, Edwin Lefevre

SECRET #92 "There are about 300 trading days in a year. Suppose a man made a trade every day during the year, which would be 300 trades, and considering that his commissions and getting in and out of the market cost him one-half point on grain, or 1/2c. Then he would pay 150 points in commission and expenses during the year. Or, trading in the same way in Cotton, if it cost him 10 points to get in and out, he would pay about the same amount of money in the year in commissions. On the other hand, suppose that a man follows the rules, follows the trend, makes one trade each month, and that trade is successful. Then he would pay 12 commissions a year instead of 300, thus cutting his expenses down to about 6 points against the scalper's expense of 150. To succeed in any business, you must consider the expenses. The losses in speculation are a part of the expenses, as well as the commissions. If your losses or expenses are greater than your profits, then it is not a profitable business, and the result is a net loss." W.D. Gann, How To Make Profits Trading In Commodities

SECRET #93 "To stand in a brokerage office or sit in a brokerage office and try to beat the market by reading the ticker and watching every quotation that comes out, is the most foolish thing a man could do, and the greatest waste of time, and the man who thinks that is the way to make money trading Commodities is making the mistake of his life. "Make it a rule to quit wasting your time, because time is money. Put in your time studying and you will be well repaid for it." W.D. Gann, How To Make Profits Trading In Commodities

SECRET #94 "I am not guessing or giving you a wild theory. I have gone through the mills. I have had every ticker in my office for years. I have thought I could not get along without them, and lost plenty of money by having them in the office and getting in wrong

because the ticker showed some minor trend and threw me off the main trend which I had figured. I made a greater success when I took all of the tickers out of my office and have not had a ticker in my office for the past ten years." W.D. Gann, How To Make Profits Trading In Commodities

SECRET #95 "I have had little faith in the judgement of other people; little faith likewise in the ability or disposition of other people to keep their mouths shut. For these reasons I have been a lone trader." Arthur W. Cutten, The Story of a Speculator

SECRET #96 "A good speculator should review his losing trades. I review my purchases and sales every day. I wait a month, then I go back and study what I did and why I did it. The fun for me is being right." R.C. Allen, How To Build A Fortune In Commodities

SECRET #97 "Writing down your cogent reasons for making an investment-what you expect to make, what you expect to risk, the reasons why-should save you many a dollar. "Years ago, in the early Twenties, I was initiated into writing down my reason pro and con before making a purchase or a sale. This was suggested to me by an investor who had amassed many millions." Gerald M. Loeb, The Battle for Investment Survival

SECRET #98 "Oh," he said, "I've got a flock-Radio, Simmons, Sears, Indian Refining, Standard of Jersey, Steel, Westinghouse." All told, he named seventeen in which he had a total of about 25,000 shares. There were hundreds like him in the country at the time. "I shook my head. "Too many to watch," I told him. "You can't get in or out. You can't hope to watch that many even on the ticker. You'd have extraordinary difficulty in arriving at sound conclusions regarding them. You ought to trim down that list. Never be in more than four or five at a time. Four is plenty. So many stocks are confusing and interfere with your judgement. You can't make money that way." Arthur W. Cutten, The Story of a Speculator

SECRET #99 "More painful than the money I had lost was the blow that had been dealt to my confidence in my fancied astuteness. I made a resolution never again to take an important risk in anything I did not know about." "Don't try to be a jack of all investments. Stick to the field you know best." Bernard Baruch, My Own Story

SECRET #100 "Put at least one-half of your profits into some form of good security, high grade bonds, good real estate, or pay off any debts you may have." R.C. Allen, How To Build A Fortune In Commodities

SECRET #101 "Repetition of affirmation of orders to your subconscious mind is the only known method of voluntary development of the emotion of faith." Napoleon Hill, Think & Grow Rich

SECRET #102 "I have tried to trade when I was in bad health, always resulting in failure, but when I am in good physical condition, I act at the right time, making a

success. If your health gives away, the most important thing to work to get your health back in perfect shape, for HEALTH is WEALTH." W.D. Gann, How To Make Profits Trading In Commodities

SECRET #103 "It is now time to realize the nature of the universe to which you belong, and of that controlling power whose offspring you are; and to understand that your time has a limit set to it. Use it then... or it will be gone..." Marcus Aurelius

SECRET #104 "The Master Mind principle, or rather the economic feature of it, was first called to my attention by Andrew Carnegie, more than fifty years ago. Discovery of this principle was responsible for the choice of my life's work. "Mr. Carnegie's Master Mind group consisted of a staff of approximately fifty men, with whom he surrounded himself, for the definite purpose of manufacturing and marketing steel. He attributed his entire fortune to the power he accumulated through this "Master Mind." "Analyze the record of any man who has accumulated a great fortune, and many of those who have accumulated modest fortunes, and you will find that they have either consciously or unconsciously employed the "Master Mind" principle. "Great power can be accumulated through no other principle!" Napoleon Hill, Think & Grow Rich.

SECRET #105 "Virtually all of the financial wizards, industrial giants, and self-made millionaires now and in times past have realized the profound effect of the compounding of money." Mark O. Haroldsen, How To Wake Up The Financial Genius Inside You

SECRET #106 "Nothing tells in the long run like a good judgment, and no sound judgment can remain with the man whose mind is disturbed by the mercurial changes of the stock exchange. It places him under an influence akin to intoxication. What is not, he sees, and what he sees, is not." Andrew Carnegie, The Forbes Book of Business Quotations

SECRET #107 "If I owned any of these Hot New Issues that have doubled, tripled, quintupled or umptupled within days and in some cases hours after they were issued, I most certainly would grab my fabulous windfall, thank my lucky stars and invest the money. It's utter nonsense to think any newly issued stock is really worth two, ten or 20 times the (offering) price... A management so stupid as to sell shares (cheap), and an underwriter so obtuse as not to discern the real value, together would provide reason enough for a sensible man to get rid of his shares." Malcolm Forbes

SECRET #108 "Save a part of your income and begin now, for the man with a surplus controls circumstances and the man without surplus is controlled by circumstances." Henry H. Buckley

SECRET #109 "A speculator is one who runs risks of which he is aware, and an investor is one who runs risks of which he is unaware." John Maynard Keynes

SECRET #109 "He who wishes to be rich in a day will be hanged in a year." Leonardo DA Vinci

SECRET #110 "Never buy at the bottom, and always sell too soon." Jesse L. Livermore

SECRET #111 "In investing money, the amount of interest you want should depend on whether you want to eat well or sleep well." J. Kenfield Morley

SECRET #112 "Just as war is waged with the blood of others, fortunes are made with other people's money." Andre Suares

SECRET #113 "Money never starts an idea; it is the idea that starts the money." William J. Cameron

SECRET #114 "Put all good eggs in one basket and then watch that basket." Andrew Carnegie

SECRET #115 "All work and no play makes jack. With enough jack, Jack needn't be a dull boy." Malcolm Forbes

SECRET #116 "Many persons think that by hoarding money they are gaining safety for themselves. If money is your only hope for independence, you will never have it. The only real security that a man can have in this world is a reserve of knowledge, experience and ability. Without these qualities, money is practically useless. The security even of money depends on knowledge, experience and ability. If productive ideas are displaced by destructive ideas, economic life suffers." Henry Ford

SECRET #117 "Money is like an arm or leg-use it or lose it." Henry Ford

SECRET #118 "Old men are always advising young men to save money. That is bad advice. Don't save every nickel. Invest in yourself. I never saved a dollar until I was forty years old." Henry Ford

SECRET #119 "Beware of little expenses; a small leak will sink a great ship." Benjamin Franklin

SECRET #120 "Remember, that time is money... Remember, that credit is money... Remember, that money is of the prolific, generating nature... Remember, that six pounds a year is but a goat a day... Remember this saying, "The good payer is lord of another man's purse." He that is known to pay punctually and exactly to the time he promises, may at any time, and on any occasion, raise all the money his friends can spare... In short, the way to wealth, if you desire it, is as plain as the way to market. It depends chiefly on two words, industry and frugality; that is, waste neither time nor money, but make the best use of both." Benjamin Franklin

SECRET #121 "The safest way to double your money is to fold it over and put it in your pocket." Kin Hubbard

SECRET #122 "Go into the street, and give one man a lecture on morality, and another a shilling, and see which will respect you most." Samuel Johnson

SECRET #123 "We cannot gamble with anything so sacred as money." William McKinley

SECRET #124 "A credit card is a money tool, not a supplement to money. The failure to make this distinction has supplemented many a poor soul right into bankruptcy." Paula Nelson

SECRET #125 "Money doesn't care who makes it." Old retail saying

SECRET #126 "After a certain point money is meaningless. It's the game that counts." Aristotle Onassis

SECRET #127 "When money speaks, the truth keeps silent." Russian Proverb

SECRET #128 "The surest way to establish your credit is to work yourself into the position of not needing any." Maurice Switzer

SECRET #129 "The way to stop financial joy riding is to arrest the chauffeur, not the automobile." Woodrow Wilson

SECRET #130 "Do not argue with the market, for it is like the weather: Though not always kind, it is always right." Percy Bysshe Shelley

SECRET #131 "Learning the rules is the easy part, but having the discipline to follow them all the time, that's much harder." Richard Dennis

SECRET #132 "The good news is, you only need to catch a few major trends each year to make a lot of money at this game. But the bad news is, the markets just don't trend that much of the time. Which means that most of the time, we have to sit through losing periods, waiting for the good times to come around. And believe you me, this is even more difficult psychologically than it is financially." Richard Sands, Turtle Secrets (taught by Richard Dennis)

SECRET #133 "1. Buy long (or sell short) when the market makes a higher high (or lower low) than it has made in the past twenty days (4 weeks) or bars on your chart. 2. Exit this position when the market makes its lowest low (highest high) of the past ten days (bars) in the opposite direction against your position. 3. Use 2% of your bankroll as a hard money stop loss point if the market starts going the wrong way. 4. Do not have any profit target, the only way you get out of a profitable trade is when the market turns against you." Richard Sands, Turtle Secrets (taught by Richard Dennis)

SECRET #134 "One of the most important principles we have in Turtle Trading - is to avoid trades that do not have a lot of expectation going for them." "taking every breakout is an inferior method of trading. If you could eliminate some of the trades, and not reduce your total profits, you would have a better system." "Simply put, the rule is that trades after profits are less likely to work, because the market will rarely go straight up and then straight down in simultaneous smooth trends. Much more likely is the scenario of alternating periods of trend and consolidation, implying that after a nice trend you should expect a period of consolidation, as opposed to expecting another nice trend. Since all of our profits come from capturing trendy moves, we can restate the rule above to say signals after profitable trends are less likely to produce a second profitable trend, and more likely to be a false breakout signaling a period of consolidation, which is what we want to avoid." Richard Sands, Turtle Secrets (taught by Richard Dennis)

SECRET #135 "Most large traders say to risk about 2% of your capital on each individual trade. That is just about right, but if you're a small trader this can be a problem. Rather than make your stops too tight, you must be willing to risk a higher percentage of your capital. This will lead to a greater risk of ruin, but it's the price you have to pay for trading with a small (perhaps undercapitalized) account size. After all, relatively speaking, you should be more willing to risk 100% of your trading account if you only have $20,000 than if you have a million. The million certainly hurts more to lose, and if you blow the $20,000, then maybe you can save it up next year and try again. One adjustment to make to the 2% rule is that if you put on a trade, and it starts going against you right away (i.e., the same day), then I would get out a lot faster (maybe 1/2% against). If it came back to my initiation price, I'd buy it back again. Aside from being psychologically frustrating, there is nothing intrinsically or mathematically detrimental to this strategy. In fact, since it is so difficult a thing to do, it is probably most correct." Richard Sands, Turtle Secrets (taught by Richard Dennis)

SECRET #136 "You will always make the most profit by following the main trend and playing the long swing. You can never make much money jumping in and out of the market trying to scalp it. If you will put in time and study to determine the main trend, and follow it the length of time that it should run and not get out until you get a definite indication of change of trend, you will make big profits." W.D. Gann, How To Make Profits Trading In Commodities

SECRET #137 "Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1." Warren Buffett

SECRET #138 "...people are overly attracted to strategies that get near a hundred percent success rate. You can come up with techniques that have close to that success rate and lose tons." Richard Dennis, Intermarket Magazine

SECRET #139 "If you look at all my trades for a year, I suppose that all the profits are in five percent of the trades." Richard Dennis, Futures Magazine

SECRET #140 "No loss should be so big that it makes a difference. That's just good trading principle. The secret to trading, I think, is what you do with the wrong positions, not with the right ones." Richard Dennis, Futures Magazine

SECRET #141 "I learned it's a lot harder than it looks. I mean that. All the rules sound simple, but doing it day by day is difficult. It takes stick-to-it-iveness to do it right. To follow good principles and not let fear, greed and hope interfere with your trading is tough. You're swimming upstream against human nature." Richard Dennis, Futures Magazine

SECRET #142* Never act on tips. * Use a system and don't deviate from it. * Never buy a stock because it has had a big decline from its previous high. * If a stock doesn't act right don't touch it; because, being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis. No prognosis, no profit. * Don't blame the market for your losses. * Never add to a losing position. A losing position means you were wrong. * Stocks are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don't make a second unless the first shows you a profit. * Always sell what shows you a loss and keep what shows you a profit. * Don't argue with the tape. Do not seek to lure the profit back. Quit while the quitting is good--and cheap. * There is only one side to the stock market; and it is not the bull side or the bear side but the right side. * The speculator's chief enemies are always boredom from within. * A man must believe in himself and his judgment if he expects to make a living at this game. * Bulls and bears make money, but pigs get slaughtered. * Use money management at all times. * Establish your trading plan before the markets open. * Detailed your plan for each trade. * Establish entry and exit points and understand risk reward rations. * Accept small losses as part of the game if you want to win. * Trade markets from the short side. * Stand aside from a position, knowing you have taken a position. * Develop a trading plan for each potential situation you may face. * Do not look at quotes during the day. * Do not concentrate on break-even levels when you are losing. * Don't liquidate a winner to keep a loser. * Develop and maintain an exit plan. Follow this plan with rigid discipline. * Sustain your patience. Big movements take time to develop.

* Don't be overly curious about the rationale behind a move. The key to wealth in trading is simplicity. Jesse L. Livermore, Reminiscences Of A Stock Operator, Edwin Lefevre SECRET #143 Wisdom from Richard Wyckoff

Richard D. Wyckoff modeled and found many common characteristics among the greatest winning stocks and the campaigns of some of the greatest stock market operators. After modeling the action of Jesse Livermore, Edward Wasserman, James Keen, J.P. Morgan, and many other big operators of his day, Wyckoff developed a trading system which helped to explain the boom and bust cycle in stocks. He analyzed the market and determine where risk and reward were optimal for trading. He emphasized the placement of stops and the importance of controlling the risk of any particular trade. He implemented this model and grew his account such that he eventually owned a mansion next door to the Alfred Sloan Estate in the Hamptons.

About Trends"The main factor is the trend. If you work in harmony with the trend of the market, your chances for success are three or four times what they would be if you buck the trend. That is, if you buy in a bull market, the trend will, under ordinary circumstances, give you a profit; but if the trend of the market is downward, and you take a long position, the only way you can get out is on the incidental rally...even when a purchase is not well-timed, it is likely to show a profit at sometime or other if the broad tendency of prices is upward. Even poor weak stocks advance to some extent in a bull market. Dealing should be in the active stocks. In order to make a profit, a stock must move. A great deal of money and many opportunities are lost by traders who keep themselves tied up in stocks which are sluggish in their action."

About Stops"Risk should almost invariably be limited. The best way to limit your risk is to form a habit of placing two- or three-point stops behind any trade which is made for the purpose of deriving a profit from the fluctuations...The most successful traders have followed this rule and its importance cannot be overestimated. Profits can often be protected by moving stop orders up or by selling one-half of the commitment in order to mark down the cost of the remaining half. Unless a stock shows ... a profit within two or three days after he buys or sells it short, .. close the trade, on the ground that his judgment was wrong as to the immediate action of the stock, and he cannot afford to be tied up. Whenever I find myself hoping that a trade will come out all right, I get out of it. Cut your losses...(have) a mental stop and when it is reached close out the trade. I can trace most of my principal losses to my failure to place stop orders when the trades were made...I have very often delayed placing a stop order until the opportunity was lost, and in some cases these losses have run into five or ten points when they might just as well been limited to two or three."

About Risk"Anticipated profits should be at least three or four times the amount of the risk."

About Short Selling"One should be able to deal freely on both sides of the market. Any one who is unable to do this had better become an investor instead of a trader, buying in panics or in big declines such securities as appear to be selling below their intrinsic value."

About Trading"You should either make a business of trading or else not try to be a trader. You cannot be successful at trading any more than you can be at mining, manufacturing, doctoring or anything else, unless you are trained for it...unless you are peculiarly adapted to the business you are better become an intelligent investor instead of an unintelligent trader. Wall Street history shows that securities more often reach their low point when some danger or disaster is threatened, than upon the actual occurrence of these incidents, and the reason the low point is made just prior to, or at the time the event actually occurs is: By that time every one who is subject to fear-of what-will-happen, has sold out. When the thing does happen or is prevented, there is no more liquidation, and the price rallies on the short interest, or else on the investment demand created by the improved situation. I have yet to find a man, in or out of Wall Street, who is able to make money in securities, continuously or uninterruptedly. My experience is no different from that of many successful Wall Street men. Like every one else, I have my good and bad periods. Sometimes it appears as though everything I touch pans out well, and at other times everything seems to go wrong. It is much like any other line of business. The best work I ever did in judging the market was when I devoted one hour a day in the middle of each session. I did not come to Wall Street. I had no news ticker. I seldom read the news items but judged solely from the action of the market itself; hence I was not influenced by any of the rumors, gossip, information or misinformation with which the Street is deluged day after day. But all he needs is the highest, lowest and last prices of the stocks which he is watching. Without being at all egotistical I believe I could go around the world and having arranged to have these few details of a stock ... cabled to me daily, I could cable my orders and come back with a profit. It would not be necessary for me to be advised of the volume of trading in that stock or the general market, although in some instances this might help. Certainly I would not care to have any news of any kind included in the cables. Most people make their mistake when averaging (down), by starting too soon; or if they are buying on a close scale, say one point down, they do not provide sufficient capital to see them through in case the decline runs two or three times as many points as they anticipate. Eight-five or ninety per cent of business, investment and speculative mortalities are due either to over-trading or lack of capital, which when boiled down are one and the same thing. And those who average their investment or speculative purchases supply in a great many instances, glaring examples of the causes of failure. Everyone should occasionally sit down and take account of stock - not securities, but his own ability, judgment, and what is most important, results thus far obtained. If he finds that the past few months or years have been unsatisfactory and unprofitable, judging from the amount of time, thought, study and capital employed, he should suspend operations until he ascertains the cause; then he should set about and cure it. This can be done by study and practice (on paper or with ten share lots ... if necessary) until he is confident that he has overcome the difficulty. It may be that he is a chronic bull and finds himself

in a bear market. I have frequently discovered that I was out of tune with the market, although I am never a chronic bull or bear, but always the kind of an animal the situation seems to call for. It has been a great advantage to me, however, to have gone off by myself at times and figured out just where I stood, and, if things were going wrong, why? I find that it is more important to study my misfortunes than my triumphs. No one can avoid having his capital tied up at times in mediums which are not satisfactory. But there should be no hesitation about switching, even though it necessitates the taking of a loss in your present holdings. A good security will make up this loss much faster than one which is mediocre. I cannot afford to let my money sleep, nor have it work slowly. I am a merchant: I must turn my money over as often as I can, so that the average yearly return will be at its maximum. One's capital should be made to do the greatest service in the shortest length of time. ... I have found that it is best to use only a small part of the total available capital for trading. To employ all or most of it is a fatal mistake, for in the case of an unforeseen situation, causing a large loss, one is obliged to begin over again; whereas if the bulk of the capital is invested where it is safe, returns an income, and will probably enhance in value, then in case of a calamity a part of it can be turned into cash in order to renew trading operations. When a man finds that he has a certain sum invested and that this sum is diminishing on account of his pulling it down for trading purposes, he is on the wrong track and had better stop short and take account of himself before he travels further. A person who cannot be successful in trading with a small amount of capital, will unquestionably lose a large amount if he employs it. It is better to depend on your own judgment than on that of any other person. If you have not reached a point where you can do this, better continue your studies and practice until you can form a sound, independent judgment on which you can base your commitments. The longer your experience, the better background you have for comparison and the greater your ability to judge and forecast correctly. As conditions are constantly changing, no two markets are alike and no two daily sessions are similar; but markets and sessions and panics and booms all have certain characteristics which should be carefully studied and intimately understood."

SECRET #144 "The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages."

"A stock operator has to fight a lot of expensive enemies within himself."

"I don't know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesn't get you anywhere."

"A man must believe in himself and his judgment if he expects to make a living at this game."

"It took me five years to learn to play the game intelligently enough to make big money when I was right."

"Speculation is a hard and trying business, and a speculator must be on the job all the time or he'll soon have no job to be on."

"The game taught me the game. And it didn't spare the rod while teaching."

"Another lesson I learned early is that there is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I've never forgotten that."

"There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily - or sufficient knowledge to make his play an intelligent play. I proved it."

"I knew something was wrong somewhere, but I couldn't spot it exactly. But if something was coming and I didn't know where from, I couldn't be on my guard against it. That being the case I'd better be out of the market."

"If somebody had told me my method would not work I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating."

"Everything happened as I had foreseen. I was dead right and - I lost every cent I had! I was wiped out by something that was unusual. If the unusual never happened there would be no difference in people and then there wouldn't be any fun in life. The game would become merely a matter of addition and subtraction. It would make of us a race of bookkeepers with plodding minds. It's the guessing that develops a man's brain power. Just consider what you have to do to guess right."

"I can't tell you how it came to take me so many years to learn that instead of placing piking bets on what the next few quotations were going to be, my game was to anticipate what was going to happen in a big way."

"I was twenty when I made my first ten thousand, and I lost that. But I knew how and why - because I traded out of season all the time; because when I couldn't play according to my system, which was based on study and experience, I went in and gambled. I hoped to win, instead of knowing that I ought to win on form."

"There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!"

"If a stock doesn't act right don't touch it; because, being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis. No prognosis, no profit."

"I should say that a chart helps those who can read it or rather who can assimilate what they read. The average chart reader, however, is apt to become obsessed with the notion that the dips and peaks and primary and secondary movements are all there is to stock speculation. If he pushes his confidence to its logical limit he is bound to go broke."

"But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions."

"It taught me, little by little, the essential difference between betting on fluctuations and anticipating inevitable advances and declines, between gambling and speculating."

"When I think I have found the solution I must prove I am right. I know of only one way to prove it; and that is, with my own money."

"This semisucker is the type that thinks he has cut his wisdom teeth because he loves to buy on declines. He waits for them. He measures his bargains by the number of points it has sold off from the top."

"The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight."

"The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others..."

"I couldn't afford anything that kept me from feeling physically and mentally fit. Even now I am usually in bed by ten. As a young man I never kept late hours, because I could not do business properly on insufficient sleep."

"You may remember the story I told you about that time when I was short thirty-five-hundred Sugar in the Cosmopolitan and I had a hunch something was wrong and I'd better close the trade? Well, I have often had that curious feeling. As a rule, I yield to it. But at times I have pooh-poohed the idea and have told myself that it was simply asinine to follow any of these sudden blind impulses to reverse my position. I have ascribed my hunch to a state of nerves resulting from too many cigars or insufficient sleep or a torpid liver or something of that kind. When I have argued myself into disregarding my impulse and have stood pat I have always had cause to regret it."

"Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. In a bull market your game is to buy and hold until you believe that the bull market is near its end. To do this you must study general conditions and not tips or special factors affecting individual stocks."

"One of the most helpful things that anybody can learn is to give up trying to catch the last eighth - or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent."

"The bull forces were at work, and the public never is independently responsive to news. You see that all the time. If there is a solid bull foundation, for instance, whether or not what the papers call bull manipulation is going on at the same time, certain news items fail to have the effect they would have if the Street was bearish. It is all in the state of sentiment at the time."

"From then on I began to think of basic conditions instead of individual stocks. I promoted myself to a higher grade in the hard school of speculation. It was a long and difficult step to take."

"Without faith in his own judgment no man can go very far in this game. That is about all I have learned - to study general conditions, to take a position and stick to it. I can wait without a twinge of impatience."

"The more I made the more I spent. This is the usual experience with most men. No, not necessarily with easy-money pickers, but with every human being who is not a slave of the hoarding instinct. Some men, like old Russell Sage, have the money-making and money-hoarding instinct equally well developed, and of course they die disgustingly rich." Jesse L. Livermore, Reminiscences Of A Stock Operator, Edwin Lefevre

SECRET #145The Billionaire Traders

Here are some quotes from some famous traders and investors:on trading technicals• "I haven't met a rich technician" - Jim Rogers.• "I always laugh at people who say "I've never met a rich technician" I love that! It's such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician" - Marty Schwartz.on diversification• "Diversify your investments" - John Templeton.• "Diversification is a hedge for ignorance" - William O'Neil.on picking bottoms and tops• "Don't bottom fish" - Peter Lynch.

• "Don't try to buy at the bottom or sell at the top" - Bernard Baruch• "Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich" - Jim Rogers.• "I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms." - Paul Tudor Jones.

So here we have a group of guys who have collectively taken billions of dollars out of the market and they don't agree on thing regarding how to make money. Not one. So what is a person to do?

Is there anything they do agree on?

Just one: money management • "My basic advise is don't lose money" - Jim Rogers.• "I'm more concerned about controlling the downside. Learn to take the losses. The most important thing about making money is not to let your losses get out of hand." - Marty Schwartz.• "I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have" - Paul Tudor Jones.• "Rule number one of investing is never lose money. Rule number two is never forget rule number 1" - Warren Buffet.• "If you have an approach that makes money, then money management can make the difference between success and failure... ... I try to be conservative in my risk management. I want to make sure I'll be around to play tomorrow. Risk control is essential." - Monroe Trout• "If you personalize losses, you can't trade." - Bruce Kovner• "The best traders have no ego. You have to swallow your pride and get out of the losses." - Tom Baldwin• "Never risk more than 1% of your total equity in any one trade. By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical." Larry Hite.

SECRET #146 "Anytime the market goes up a reasonable amount - say a strong day's work - after you've put on a position, it's probably worth adding to that position. I wouldn't want to wait for a retracement. That is everyone's favorite technique - to buy something strong that retraces. I don't see any justification in the statistics for that. When beans are at $8.00 and go to $9.00, if the choice is to buy them at $9.00 or buy them if they retrace to $8.80, I'd rather buy them at $9.00. They may never retrace to $8.80. Statistics would show that you make more money buying them and not waiting for a retracement." Richard Dennis

SECRET #147 "The ability to increase one's net worth and net wealth [is key]. The net worth of most Americans [for example] is denominated in US dollars, while their net wealth is the purchasing power of those dollars in the global marketplace. An objective

for investors must be to increase both net worth and net wealth, which can be accomplished in the currency markets." Tom Basso

SECRET #148 "The aha! process lies at the heart of price change. For instance, consider the series: OTTFFSSE. What is the next letter? This puzzle creates tension - until you see the first letters of the ordinal numbers - one, two. Aha! you say. A lot happens during an aha. The puzzle dies and the tension dissipates. A societal aha! drives price. Read the newspapers and the news magazines during a major move. At first, no one gets why the move is happening. There's a lot of confusion. Part of the move's way up, some people get it. At the end, everybody gets it. The tension is resolved and the move ends." Ed Seykota

SECRET #149 "I don't think trading strategies are as vulnerable to not working if people know about them, as most traders believe. If what you are doing is right, it will work even if people have a general idea about it. I always say you could publish rules in a newspaper and no one would follow them. The key is consistency and discipline." Richard Dennis

SECRET #150 "I don't believe that I am the only person who cannot predict future prices. No one consistently can predict anything, especially investors. Prices, not investors, predict the future. Despite this, investors hope or believe that they can predict the future, or someone else can. A lot of them look to you to predict what the next macroeconomic cycle will be. We rely on the fact that other investors are convinced that they can predict the future, and I believe that's where our profits come from. I believe it's that simple." John W. Henry

SECRET #151 "...when I was designing what turned out to be a trend following system...[that] approach - a mechanical and mathematical system - has not really changed at all. Yet the system continues to be successful today, even though there has been virtually no change to it over the last 18 years." John W. Henry

SECRET #152 "George Soros has made a lot of money on shorting the British pound and he might have fundamental reasons because he maybe knows a guy from the Bank of England or whatever. But the bottom line is that Trendstat [our firm], who doesn't know anything about the British economy was in on the same exact trade as Soros, and made a bunch of money too. The thing is that large trends, large movement in the market, are going to create a lot of opportunity. Don't get hung up too much on the buy/sell decision engine on where do you want to buy and where do you want to sell. Because in the end, large movements are going to probably create most of your profits. And that goes for short term trading and long term trading alike. Short term trading you get in and lose one thing that was in your favor and it turns around on you and you have to blow out of it, it's not going to do you any good. You've got to have the big trend. Sure there are the trends in the short term in the day trading or a smaller trend in the big one. But hey if you put a day chart over on the wall or a tick chart over on the wall or if I put a daily chart and I walk across, they all kind of look the same from a distance." Tom Basso

SECRET #153 "Twenty years from now, you will be more disappointed by the things you didn't do than by the ones you did. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover." Anonymous

SECRET #154 "I saw an article in Investors Daily showing the top ten highest paid executives on Wall Street last year. George Soros was at the top of the list. Stanley Druckenmiller was right up there too. Paul Tudor Jones, Bruce Kovner and Louis Bacon were also in the top ten. In fact, five out of the top ten were futures traders, and nine out of the top ten were money managers, all of whom work for a percentage of profits they earn for clients." Richard Sands, Turtle Secrets (taught by Richard Dennis)

End of report.