Trading Tips From Millionaire Traders

Warren Buffett at Conference On Issues Affecting U.S. Capital Markets Competitiveness
Photo: Chip Somodevilla / Getty Images

If you want to do something well, learn from people who are succeeding at what you want to do. If you're a trader, or want to be, study the lessons offered by people who are successful in the markets. Trading is difficult, as almost anyone who has ever tried it can attest. Making one or two winning trades is relatively easy, but consistently winning over many trades is much harder. Making money in the markets requires a strategic and methodical approach.

Here are some simple tips from millionaire traders to keep you on track. One comment or tip isn't a trading strategy, though; you need to take that advice and incorporate it into your trading plan in a way that works for you and your trading style.

Jesse Livermore on Letting Go of Losses

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 it out…. Of all speculative blunders there are few greater than trying to average a losing game…. Always sell what shows you a loss and keep what shows you a profit. - Jesse Livermore

This is a common problem for most traders. They hang on to losses hoping that they will rebound, often to only get out flat (no profit) in a best-case scenario. But in the worst scenario, they lose a lot of money. In another scenario, traders are too quick to take a profit, not letting the trades that are actually working play out. Big losses and small winners are a sure way to never succeed in the markets.

Alexander Elder on Watching Trends

To be a good trader, you need to trade with your eyes open, recognize real trends and turns, and not waste time or energy on regrets, and wishful thinking. - Alexander Elder

Most new traders don't put in the work it really takes to be able to see market dynamics unfold second-by-second. And they also don't put in the time to learn a strategy that will tell them exactly what to do when certain conditions materialize. Additionally, they don't prepare themselves mentally for the price oscillations that will occur once in the trade—which can lead to hanging onto losses or dumping winners early, as discussed above. Therefore, without adequate preparation, new traders trade on wishful thinking and fear, constantly moving into and out of the market at the wrong times. Stay in the moment. Focus on what the market is doing, and don't get caught up in your fantasies about the future or regrets of the past. Both will distract your attention from the only thing that matters right now—monitoring market dynamics and planning your trades based on those dynamics.

Warren Buffett on Learning Your Trade

Risk comes from not knowing what you're doing. - Warren Buffett

Is blackjack risky for the casino? On any single hand, they could lose money, but over thousands of hands they will come out ahead. There is very little risk for the casino of losing money at blackjack over the long term, and yet blackjack is a gambling game. Many people consider the financial markets a gamble, but it is only risky if you don't have an edge (like the casino has). If you have an edge, which is created through hard work and a solid trading strategy (and implementing that strategy consistently), then there is actually little risk in trading. Risk comes from not having the edge—you are a gambler at the table instead of the dealer.

Jesse Livermore on Putting in the Work

The game taught me the game. And it didn’t spare the rod while teaching. - Jesse Livermore

Notice a theme in the commentary so far? It's that trading takes work and a methodical, structured approach. Unfortunately, ideas will only take you so far. The market is slightly different from one day to the next—changes in trends, volatility, and volume all affect how profitable you will be from one day to the next. Traders need to adapt to changing conditions. This is another required skill set in addition to having a methodical approach.

As discussed above you need to let go of emotion and trade what the market provides, not what you want it to provide. The market is neither inherently cruel nor generous, yet it will seem unrelentingly harsh if you aren't adequately prepared. It can decimate your account in seconds if you fail to use proper risk management, and the only person to blame is yourself. The market is simply the market; it doesn't care if you make or lose money. If you are losing money consistently, the market is trying to teach you a lesson. Learn from it, or continue to get beaten until you learn your lessons or lose your capital. 

Final Word on Millionaire Traders

Winning traders pay attention to what is happening in the market now, and don't have fanciful notions about what will happen, or regret about what has happened in the past. This allows them to stay in the moment, controlling the risk on losers and capitalizing on trades that progress as expected. Millionaire traders are masters of their particular craft. Developing a strategic approach that gives you a consistent edge takes time and work.

The stock market has no problem taking your money. If it does, it's trying to tell you something. If you listen and learn to adapt, the market also has no problem rewarding you for your diligence. It's an even playing field. Anyone can make money. The question you have to ask is, will it be you?

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Edwin Lefèvre. “Reminiscences of a Stock Operator,” Page 142. Wiley, 2012.

  2. Alexander Elder. “The New Trading for a Living,” Page 3. Wiley, 2014.

  3. National Institutes of Health. “Influence of an Intermediate Option on the Description-Experience Gap and Information Search.” Accessed May 30, 2021.

  4. Edwin Lefèvre. “Reminiscences of a Stock Operator,” Page 52. Wiley, 2012.

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