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Larry Hite

I have two basic rules about winning in trading as well as in life: (1) If you don’t bet, you can’t win. (2) If you lose all your chips, you can’t bet.

Larry Hite

In trading, you can define three categories of players: the trade, the floor, and the speculator. The trade has the best product knowledge and the best ways of getting out of positions. For example, if they are caught in a bad position in the futures markets, they can offset their risk in the cash market. The floor has the advantage of speed. You can never be faster than the floor. While the speculator doesn’t have the product knowledge of the speed, he does have the advantage of not having to play. The speculator can choose to only bet when the odds are in his favor. That is an important positional advantage.

Larry Hite

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

Evaluating systems solely on a calendar year basis is very arbitrary. What you really want to know are the odds for profitable performance in a holding period of any length.

Larry Hite

I have noticed that everyone who has ever told me that the markets are efficient is poor.

Ed Seykota

I think that if people look deeply enough into their trading patterns, they find that, on balance, including all their goals, they are really getting what they want, even though they may not understand it or want to admit it.

Ed Seykota

Yes, the winning traders have usually been winning at whatever field they are in for years.

Ed Seykota

1. He/she loves to trade; and
2. He/she loves to win.

Ed Seykota

Inflation is part of the way societies sweep away the old order. All currencies eventually get debased–like it or not. Compute one penny invested at the time of Christ, compounded at 3 percent per year. Then consider why nobody has anywhere near that amount these days.

Gold tends to be dug up, refined, and then buried again. The geographical entropy of all gold on the planet seems to decrease over time. A lot has been collected in vaults. I project the trend as one toward a central world gold stash.

Ed Seykota

Gut feel is important. If ignored, it may come out in subtle ways by coloring your logic. It can be dealt with through meditation and reflection to determine what’s behind it. If it persists, then it might be a valuable subconscious analysis of some subtle information. Otherwise, it might be a dangerous sublimation of an inner desire for excitement and not reflect market conditions. Be sensitive to the subtle differences between “intuition” and “into wishing.”

Ed Seykota

a. Cut losses.

b. Ride winners.

c. Keep bets small.

d. Follow the rules without question.

e. Know when to break the rules.