50 Lessons From Top Traders

bettersystemtrader.
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CONTENTS
Adam Grimes ........................................ 2 John Ehlers............................................ 2
Alan Clement ........................................ 2 Kevin Davey .......................................... 2
Andrea Unger........................................ 2 Kris Longmore....................................... 2
Andreas Clenow .................................... 2 Kurt Sakaeda ......................................... 2
Andrew Gibbs ....................................... 2 Larry Tentarelli ..................................... 2
Art Collins .............................................. 2 Larry Williams ....................................... 2
Bert Mouler........................................... 2 Laurent Bernut ..................................... 2
Bob Pardo ............................................. 2 Linda Raschke ....................................... 2
Brent Penfold ........................................ 2 Michael Cook ........................................ 2
Brett Steenbarger ................................. 2 Michael Himmel ................................... 2
Cesar Alvarez ........................................ 2 Michael Melissinos ............................... 2
Dave Bergstrom .................................... 2 Murray Ruggiero .................................. 2
Dave Walton ......................................... 2 Nick Radge ............................................ 2
Elliot Bernstein...................................... 2 Nitesh Khandelwal................................ 2
Ernest Chan ........................................... 2 Perry Kaufman ...................................... 2
Gary Antonacci ..................................... 2 PJ Sutherland ........................................ 2
Gary Hart ............................................... 2 Ralph Vince ........................................... 2
Gary Stone ............................................ 2 Richard Peterson .................................. 2
Greg Morris ........................................... 2 Rob Hanna ............................................ 2
Howard Bandy ...................................... 2 Robert Bubalovski ................................ 2
Ivan Hoff ................................................ 2 Robert Carver ....................................... 2
Jack Vogel.............................................. 2 Scott Andrews ...................................... 2
Jake Bernstein ....................................... 2 Scott Phillips ......................................... 2
Jay Kaeppel ........................................... 2 Stuart McPhee ...................................... 2
Jerry Parker ........................................... 2 Tomas Nesnidal .................................... 2
bettersystemtrader.com 3
Dear Trader,
The trading journey is indeed a difficult and bumpy one!
There are many challenges to overcome and lessons to be learnt.
One of the quickest ways I know to improve at anything faster is to

learn from the experience of others.
Follow their path.
Analyze their successes and their failures, and use that knowledge to
propel yourself forward.
And that is exactly what this book is about.
In this book you will find 50 trading lessons from top traders.
These are lessons that can sometimes take years to learn, and now
you can learn them in just minutes!
As Albert Einstein famously said “The more I learn, the more I realize
how much I don’t know.”
So whether you're a beginner or more experienced trader, approach

these lessons with an open mind.
Absorb them.
Take what is useful for your own trading and apply it.
I hope the lessons outlined in this book are as useful to you as they
have been for me!
Happy trading,
Andrew Swanscott.
BetterSystemTrader.com
Adam Grimes
adamhgrimes.com
Podcast Episode 55
“What’s the biggest lesson you’ve learnt through trading?”
The biggest lesson?
There are so many big lessons.
Trading is really hard and I think we covered these lessons.
Trading is really hard and no matter how quantitative you are, the
behavioural and emotional aspect is still there, and it still matters.
You need to be very self-aware.
“No matter
how quantitative you are,
the behavioural and emotional
aspect is still there.”
Alan Clement
helixtrader.com
Podcast Episode 29
I think, for me, the biggest lesson that I’ve learnt, or the biggest lesson that I’ve discovered,
is that trading is an endeavour. It’s a marathon. Not a sprint.
When we first come into trading as beginners, we want to take lots of leverage and we want
to take lot of trades and we want to make lots of return, what would make you thousands
and thousands and thousands every month or every week or whatever it happens to be.
But what you find is that over time you’re going to have good times, you’re going to have
bad times, you’re going to have good years, you’re going to have bad years, and to me, you
really should have a sort of five-to-ten-year time horizon and not be too focused on what’s
happened this week or this month or even this year.
It’s just basically too short in terms of a period to make any real assessment about either a
system or your own performance.
It’s easy when you look at fifteen-year back test and say “Oh, yeah. Well, it goes from the
bottom left-hand corner to the top right-hand corner, so, yeah, I could trade that. No
problem.”
But what you’re not seeing is if you zoom in, all those little ups and downs and bumps and
flat spots that you’re going to have to live through day by day by day.
So I think it’s very easy to fall into what’s called

‘recency bias’, where you’re just focused on the
“Trading is a recent returns or the recent results.
marathon, But, I think, having that larger time horizon is going
not a sprint.” to give you a much better chance of success.
So that’s certainly what I try and focus on.

Andrea Unger
skilledacademy.com
Podcast Episode 16
The biggest lesson is that I still don’t know how long it can last.
Trading is incredible.
I actually lost money more from special events, the crack of PFGBest
for example, and the Swiss Franc affair, where some important part of
my money was taken away, but there are no certainties in this market.
Everything is unsure.
That’s why I also suggest to think about something else, because you
never know what happens tomorrow.
“There are no certainties

in this market,
everything is unsure.”
Andreas Clenow
followingthetrend.com
Podcast Episode 13
Probably not to take it personally!
I think one thing that takes a long time to learn is to take major losses in terms of
money, not necessarily in percent but to lose a large amount of money and still
sleep at night.
Once you start managing institutional money, the daily swings in terms of actual
money, gained or loss, it can be quite substantial.
If you are in a draw down that might not be worrying from a backtesting point of
view for instance, something that's quite normal in terms of behaviour, might be
the same as everyone else losing out and you are in line or even better.
But still if you start thinking about how much money was actually lost last week
and what it means in the real world, this amount it drives you crazy.
You have to get rid of this thinking.
You have to let it go.
It's the same thing of course when you are gaining, but then you are too happy to
carry on anyway, it's mostly when you start losing when you’re thinking about the
amount of money in actual dollars that was lost and what this actually buys.
“If you start thinking about how

much money was actually lost and
what it means in the real world, it
drives you crazy.”
Andrew Gibbs
halifaxonline.co.nz
Podcast Episode 35
You have to understand why you’re doing something.
You have to be able to put your hand on heart and say or know why
this particular system is going to make me money.
If you can’t do that then you probably using a system that is data mined
or curve-fit.
I suppose my biggest lesson has been avoiding over-optimization on

the trading systems.
And of course it is hard to get away from it.
I still do it.
At least I’m aware of it.
“You have to understand why

you’re doing something.”
Art Collins
artcollinstrading.com
Podcast Episode 73
Follow your system.
So that you believe in it, make sure that you test it according to the
prudent rules and then believe in it.
Flip the switch on and get out of the way.
“Follow your system.”

Bert Mouler
profluentcapital.com
Podcast Episode 64
That changes every month, if not every day.
I don’t know if this is a lesson, but – and this applies to life as well – it’s
incredible that a tiny, tiny edge, 0.1%, just repeated over and over and
over consistently, with a long enough period of time basically gets you
whatever you want in any sense and in every field.
“A tiny, tiny edge, repeated over

and over… basically gets you
whatever you want.”
Bob Pardo
pardocapital.com
Podcast Episode 60
Well, in the end, I think trading will really reveal all of your weaknesses
and probably your strengths as well.
So ultimately I think it’s forced me to continue to try to become a better

person.
I suppose that’s probably the biggest lesson.
That may sound odd to you, but that’s what it’s done.
That’s what it’s done for me.
“Trading will really reveal

all of your weaknesses.”
Brent Penfold
indextrader.com.au
Podcast Episode 2
Money management, money management.
I blew up twice and almost a third time before I understood this concept
of risk of ruin.
And sure, my strategies at the time might not have been as good as what
they are today but what blew my accounts up was simply I was risking
too much money per trade.
My risk of ruin would have been like 40 or 45%, maybe above 50% and
if I had known about this key concept of risk of ruin 20, 25 years ago I
would have avoided all that pain I went through.
Number one, risk of ruin, risk of ruin, risk of ruin – which in money
management is a key weapon against risk of ruin so money management
was the first manifestation which says I am risking too much money and
that led to this understanding that, “Hey, risk of ruin. My risk of ruin was
too high! No wonder I lost!”
I had to get my money management under control and introduce

positive expectancy, so money management that led to risk of ruin.
“I blew up twice and almost a

third time before I understood
this concept of risk of ruin.”
Brett Steenbarger
traderfeed.blogspot.com
Podcast Episode 25
The biggest lesson I’ve learned from trading is that it’s important to have something in your
life more important than trading.
Because I’ve been involved in hiring in a lot of the firms that I’ve worked, right? And so
people come to me and they’re looking for a job as a trader and so what would they say?
They have a passion for trading and trading is the most important thing in their life and so
forth and so on.
I know that someone is going to blow up because if you don’t have anything more
important in your life than trading, then your feelings of self-worth and your feelings of
success and failure will raise and fall with your P&L.
You have to have something more important than your P&L that gives you stability so that
you can weather the inevitable ups and downs of trading.
So, it’s important to have relationships that are more important than trading.
It’s important to have personal interest and commitments whether those be of a family
nature, a spiritual nature, you know, with friends.
But it’s important to have things in life that

“It’s important to sustain you through the lean times of trading.
have something It’s important to have capital to sustain you
in your life more through the lean times of trading.
important than If you’re all in and you don’t have other things
to sustain you, you won’t have the longevity
trading.” and you won’t make trading a career.
Cesar Alvarez
indextrader.com.au
Podcast Episode 3
The biggest lesson I have learned is what to do with trading mistakes and
have a plan for how to deal with them.
And what I mean by that is you actually type in the wrong symbol what
are you going to do?
You have to plan ahead of time.
I have seen so many traders really screw that up and I have screwed it
up myself, of knowing what your plan is when you make a trading
mistake.
“You have to plan

ahead of time.“
Dave Bergstrom
buildalpha.com
Podcast Episode 79
To test everything.
I can’t believe anything I hear or read.
I have to test it on my own.
“Test everything.”
Dave Walton
statistrade.com
Podcast Episode 51
The biggest lesson I’ve learned through trading is also something that
my statistics professor hammered in my head and that has to do with
type 1 and type 2 errors and understanding what they are.
From a statistical perspective, what we want to avoid in trading is

allocating capital somewhere where we made a mistake and we were
too optimistic on what to expect, so we want to avoid that.
That’s the lesson I learned because the converse of that is we don’t

allocate capital to actually a good trading system.
You have to look at what’s the cost benefits, so in the first case, you
allocate capital to a trading system that you think is good and is not.
It causes a loss of capital.
In the latter case, it’s simply an opportunity cost, not actual capital that’s
lost, so that’s probably the biggest lesson I’ve learned is to err more on
the side of that.
“Don’t allocate capital

to a trading system that you
think is good and is not.”
Elliot Bernstein
2chimps.net
Podcast Episode 19
Well, the biggest lesson that I’ve learned through trading is that you
need to be disciplined, you know.
Like we were talking about earlier, some systems might be great systems
if they throw you five or six losses in a row.
One of the problems with not being disciplined is that as you progressed
through those five or six losses, you’ll become more emotional and your
losses will get bigger and bigger.
The fifth or the sixth one might wipe you out completely because you’ve
lost all sense of how you should be approaching this, you’ve forgotten
all your other tools, all of your other points of discipline that you would
have applied to those earlier losses.
So, that’s one of the biggest lessons, that’s one of things I tried to apply
to all parts in my life.
“You need to be disciplined.”

Ernest Chan
epchan.blogspot.com
Podcast Episode 12
The biggest lesson is not to be overconfident of a strategy in the

beginning at least.
Oftentimes we see a great back test and we see that the strategy went
well for three months.
We are tempted to allocate 150% of our equity to it, that usually is not
well advised.
One should always be patient and be sort of humble in the face of the
market.
You should always prepare, think about the worst-case scenario.
It would be a good antidote to overcome this.
And yes, I have suffered this multiple times in my career and hopefully I
have finally learned that lesson.
“One should always be patient

and humble in the face of the
market.”
Gary Antonacci
dualmomentum.net
Podcast Episode 9
The biggest lesson I have learned is to stay with whatever approach that
I have.
Investigate carefully.
Choose wisely and follow faithfully.
That's basically it.
“Choose wisely
and follow faithfully.”
Gary Hart
trendfindertrading.com
Podcast Episode 85
Trading for the systems not for my beliefs.
I guess what kind of goes hand-in-hand with that or how I learned that is
that I am not a very good discretionary trader.
You might say I’m a horrible discretionary trader.
When I sit there and try to do discretionary trading, I watch the price
action.
I think I know what’s going to happen, I fall right into the same trap as all
the other people that are falling into that trap.
That’s where some of the edge comes from with the mechanical trading
systems and being able to test, so like if I’m watching the market, and I
say, “Gosh! It so looks like the market is going to rip up going into the
close,” well now instead of saying, “You know what, that’s what’s going
to happen. Let me go buy”, because it’s so easy to buy, it’s so easy to
trade, right? It’s like, “You know what, I’m going to buy one contract. It
went down a point. Now, it’s coming back. Okay, let me add another
contract.”
“Trading for the systems,

not for my beliefs.”
Gary Stone
sharewealthsystems.com
Podcast Episode 8
The biggest lesson I have learned through trading is process.
It is one of defining a process and out of the heat of the market so to be

definitive in writing down a process that you follow that will suit you.
For instance the gentleman I mentioned I spoke to this morning SPA-3

ASX or NASDAQ products are just not for him. But we have a SPA-3 ETF
product which we... You would only time the market and be out 2 to 3
times a year, it is something that would lend itself more to him.
But what I said to him is what you need to do is write down what your
mission is for your investing portion of your life, what your goals and
objectives are for that amount of money that you are going to actively
manage.
Then you need to very specifically write down the process that you are
going to follow to achieve those goals and objectives, and it is the
identification and stipulation and the details of the process you are going
to follow.
Everything in life requires a process whether it is a business, whether it

is a fitness process, whether it is an eating process, whether it is being a
father process, whether it’s being a golfer process, you need to have a
process.
You can’t just walk up to the ball and hit it.

95% of the golf swing occurs before you hit the golf ball, not in the
process of hitting the golf ball, it is the preparation of hitting the golf ball.
And it is the same with investing.
95% of what you do with investing happens before you actually start
investing.
It is building that process, identifying it through reading, through

listening to podcasts like this and formulating something that’s going to
sit comfortably with you.
Writing that process down and then putting the steps in place to actually
execute it.
“Trading is process.”
Greg Morris
stockcharts.com/articles/dancing/
Podcast Episode 31
The biggest lesson is that I’m not a day trader.
I tell people I have master’s degree in what-not-to-do.
If you don’t learn from your mistakes, then you don’t get a master’s degree
for it.
I was trading gold back in the ‘80s, futures and I was doing very well. I had
an Apple II computer and I’d buy indicators that are telling me everything
and I was going in to a little strip-shop centre commodities firm.
I was trading so much that they gave me a little room and bought me a
subscription to one of the big charting magazines or books.
What happened was I build this account way up and I thought about
quitting my day job and all that.
I stopped looking at my data.
I stopped looking at my software the night before and I thought that I

was just a gifted trader.
Then I just started ignoring the software, go into there and trade and in
about two months, I wrote a check for $9,000 to close the account.
In other words, it cost me $9,000 plus the, I think, the $10,000; so I lost
$19,000.
Back in the early ‘80s, that was a lot of money for me but I built an
account up to six figures.
And so, really in my mind I lost a whole bunch of money but I learned a
lesson and that is, in Texas we have a saying ‘dance with the one that
wronged you.’
In other words, it was the charting and the indicators that made me
successful trader at the beginning, it was not me going in there looking
at that quote machine and just guessing about the future.
And so, whatever technique you find, stick with it if you’re comfortable
with it.
You’ll learn these things over time because you paid a price for them.
So, I guess that it kind of comes back to discipline and I’ll say it again.
Discipline has got to be one of the most important components to be a

successful investor there is – personal discipline.
“Discipline has got to be

one of the most important
components to be successful.”
Howard Bandy
blueowlpress.com
Podcast Episode 6
It is really hard.
In trading, there are no challenge tournaments.
There are no handicaps.
There are no mulligans.
When I press the button that says, “Buy,” I am trading a very small
account and the very large account is probably one that’s well-funded
by a company that has a great deal of expertise and they are very much
more likely to be correct on that trade and then I am which means that
I am trying to learn in an arena where I am competing with well
educated, well-funded experienced professionals and it is quite difficult.
“It is really hard… I am competing

with well educated, well-funded
experienced professionals and it is
quite difficult.”
Ivan Hoff
ivanhoff.com
Podcast Episode 88
The biggest lesson is that different setups work in different markets.
The very same setups that can make you a lot of money in a rising market
are setups with no edge in a choppy market or in a declining market.
You have to pay attention to your environment.
The market plays the music, and when the music changes, you need to
change the way you dance or just step on the sidelines because you’re
going to lose money if you keep doing the same thing.
They say that the definition of insanity is doing the same thing over and
over again and expecting different results.
In the market, if you do the same thing over and over again, you’re
guaranteed to get different results just because the markets are constantly
changing, so I think paying attention to the different types of markets is
super important.
I think that’s the most important thing for a trader, and the second most
important thing is look for industry relative strength.
There are always industries that are leading the market up and down, and
if you focus your trading efforts in those leading sectors, all of a sudden
you’ll notice that risk management will become a lot easier and your
returns will improve substantially.
“Different setups work in

different markets.”
Jack Vogel
alphaarchitect.com
Podcast Episode 67
The biggest lesson is the more concentrated your portfolio, the higher
your tracking error is going to be relative to an index.
And a lot of times you can look at back tests and see out performance,
but you don’t see the tracking error month to month, which when you’re
running live money and it’s other people’s money and you have to
explain that, that can be difficult.
So what I’d say is the more concentrated the portfolio, the higher the
tracking error.
“The more concentrated

the portfolio, the higher
the tracking error.”
Jake Bernstein
Jakebernstein.com
Podcast Episode 1
My biggest lesson learned through trading is-- let me think about that
for a minute because I've learned so many of them, Andrew.
Don't listen to anyone else, including me.
Don't believe anything that anyone tells you, including me, until you've
seen it for yourself.
I get emails, I get proposals, I get people coming into my office with
charts with 40 different colours and lines on them.
They look really good. Some of these things are utterly fascinating.
I don't believe any of them.
I won't believe them until I see them myself.
And so my greatest lesson is I don't care how great a trader is. I don't
care how great their reputation is.
I've been associated with some of the best traders in the world but I will
not believe anything they say, anything they do, anything they show me
until I see it myself and that holds true for me or anybody else in the
business.
Find it yourself and then, if you believe it, use it.
I live in California, in the mountains-- in the Santa Cruz mountains and

many times I'm invited to go speak in Silicon Valley, which is not too far
from here.
I'll be in the room with maybe two or three hundred people, teaching
them my trading methods.
Most of these people are engineers who work at big, big software
companies.
And I say to them, "Here's the methodology. Do you know what we can
do with this methodology? We can put it on a computer and we can back
test it."
And they say, "What an incredible idea." [laughing]
I say to myself, "What's wrong with these people?" Why would they buy
a trading system from someone without a back test?
“Don't believe anything that

anyone tells you until you've
seen it for yourself.“
Jay Kaeppel
jayonthemarkets.com
Podcast Episode 34
Here's what I always tell people, in fact I gave a talk last week in
downtown Chicago and here's what I told them:
Market truism number one is this: bad stuff happens.
It just does.
Your number one job as a trader is to prepare for, survive and get
past the bad stuff.
“Your
In other words, the job is not to go oh my God, I can't believe this
number one happened, this is terrible.
job as a I'm telling you now that bad things will happen.
trader is to Anybody who is listening to me who has been trading for a while,
prepare for, they know exactly what I'm talking about, they've seen it happen.
survive and Things are going great, all of a sudden out of nowhere something
unforeseen happens.
get past the
Your job is to be prepared for that.
bad stuff.”
In other words, when I talk about a trading plan, how are you going
to handle the bad stuff?
Basically like Murphy's Law, whatever can go wrong will go wrong.
I always tell people market truism 1A is Murphy hates you, plan

accordingly.
That's good advice.

Jerry Parker
chesapeakecapital.com
Podcast Episode 17
Do all the trades and be systematic.
Don’t trade too large.
I felt like I’ve repeated that a few times but don’t desire the
approval of others.
One of the things that were thought in the Turtle Trading that’s
been lost over the years, at least, when I hear about the Turtles
“Do all is sort of a contrary opinion point of view.
the trades Don’t try to fade the news.
and be Go with the trend.
systematic.” If the news or the sentiment is negative and the market is

going up, you know, welcome that idea.
One of the cliché over the years is the best trades are the ones
where the fundamentals and technicals agree and I would say
that’s sort of the opposite.
If you want the fundamentals, or the sort of the popular news

to be different than the trend.
So I think, that’s a little negative wisdom that – if you’re a

systematic-computerized CTA, you’d probably not include that
in your trading but if you’re having fun trading your own
money, add a little bit extra to your position, you know,
depending upon the sentiment or the news at the time.
John Ehlers
mesasoftware.com
Podcast Episode 48
The biggest lesson is I’ve learned to be humble.
When you’re winning, you think you’re a genius, not so much losing, so
you have to recognize that the market does what the market wants to
do not what you want it to do.
Parenthetically, if you find yourself hoping that the market will turn
around the prices, the movement will turn, that’s the time to exit
because hope has no value.
Kind of a secondary thing, you really have to have enough capital to trade
to weather through adversity.
One of the most – not my problem but a problem I’ve seen with a lot of
traders is when they run into adversity, they’ve been trading a system,
they’ll drop it, and they’ll jump into another system that’s been hot and
that will fade away and then they’ll jump to another one.
They’re always making the same mistake.
I think they need to do research to pick a strategy or trading method and

stick with it because all strategies and all methods have adverse
conditions and when you jump around, you’re just repeating the same
error over and over.
“Be humble.”
Kevin Davey
kjtradingsystems.com
Podcast Episode 5
Probably the biggest lesson is you just have to be persistent.
And a lot of times what you have to focus on is the end goal, not necessarily all the in
between stuff.
So what I mean by that is a lot of people will focus on the day-to-day fluctuations in their
account and that will just drive you crazy.
What you have to focus on is more the end goal.
So let’s just say, “Hey, my goal is 30% a year return,” or 50% or whatever and I know I
have to endure a drawdown to get there but I am just going to focus on that end goal
and develop trading systems that support that goal.
And yeah, I know I’m going to go through some bumps in the meantime but I just have
to keep looking out to the horizon to know that if I am doing things the right way,
eventually things will work out and it might not always be in the short run but you can
certainly have huge losing days but that doesn’t mean that your whole approach is
wrong.
So focus on that endpoint and also then the other part which I mentioned is be
persistent where maybe the first 50 trading ideas you try, the test results were awful.
That doesn’t mean you quit.
It means you keep going until you develop

“Focus on the something and then once you do the next one
endpoint and be becomes a little bit easier and then you just keep
developing and developing.
persistent.”
So you really have to stick to it – is the other part.
Kris Longmore
robotwealth.net
Podcast Episode 82
The biggest lesson is don’t believe anything that you read about trading
until you test it for yourself and always rely on the evidence that you’ve
gathered yourself rather than what other people put in front of you.
Not to say that there aren’t great practitioners out there and people
putting good information out there, they certainly are, but it definitely
pays to test it for yourself.
“Don’t believe anything

that you read about
trading until you test it for
yourself.”
Kurt Sakaeda
Podcast Episode 94
Get it executed and do the work.
I would have to say those are the two.
Two of the weaknesses I see with traders who have trouble is they’re not
doing the work or they’re not executing.
They spend too much time in analysis paralysis where they’re saying,
“There’s one more thing I can try” and basically once I have a functional
model, I’ll have my one lot moving and I’ll see how it handles, but I also
do beat data to death before I actually go and make a move.
In the case of a disaster, I’ve downloaded all the web pages. I’ve printed
them up. I’ve marked them up. I’ve gone and put them into a
spreadsheet and I say, ‘Okay, this is what I think of the company.” Yeah,
work and execution.
Putting in the work, for example, if you go in the case of seasonal trading,
I have tried to sell and give away like notes and it doesn’t work because
what happens is the guy has not actually gone and calculated out and
ground out all the numbers and searched for errors.
I’m fairly confident in my numbers because I’ve put them all together
and ground them down and sprinkled them all over each other and I
have a solution.
If you don’t actually do that work, you don’t have faith in your research,
so I find a lot of people who buy systems from other people, they’ll put
on some trades and they’ll say, “This doesn’t work,” and give up or they
get too nervous because they haven’t done the work.
They’ve made the system says, ‘Well, on average, you should look for a
$1,000 win,” and they get nervous at $500 and they say, “Okay, I’m out.”
They don’t get to realize exactly because they get scared.
They say, “Well $500 is a lot of money, so I need to go and take it.”
If you’ve done the research, you can sit around and just watch the prices
go up and down and it doesn’t bother because you know that the way
to the universe works in your favour.
“Get it executed and do

the work.”
Larry Tentarelli
twitter.com/LMT978
Podcast Episode 76
I think the biggest lesson that I’ve learned is

over time you start to find yourself.
What happens is, people get into trading –

and we both know people all over the world
that trade, different personalities – people get
into trading for different reasons, not just to
make money, and I don’t always know if
people know when they get in, why they’re
actually getting in.
But I think the biggest lesson that I’ve learned “Be introspective
is to really be introspective and be
accountable for everything that happened to
and be
me, and once I stopped blaming the market or accountable.”
the Federal Reserve or Alan Greenspan and
once I realized that everything – that shows
you how long I’ve been trading when I even
talk about Alan Greenspan – just the fact that
if I was going to make it, it was going to be I
was going to figure it out for myself and CNBC
or a book wasn’t going to do it for me.
Larry Williams
ireallytrade.com
Podcast Episode 20
Humility.
In my best years of trading, I was a jerk. I really was.
And I’d see friends of mine that had get real successful, and they were
jerks, and then they get a lesson in humility and they were really nice
again.
So, yeah, I think that’s one of the big psychological lessons.
It’s really easy for me to be a jerk, and I try not to be, but, oh my gosh.
I’d say that’s part of it.
And maybe learning from other people.
But, anyways, here’s the other thing I got out of all this – again, I’m the
artsy craftsy who was an art major. I’m kind of confused. I went to college
on a football scholarship, but was an art major, wearing pastel clothing
on the football practice and beating people up – so I didn’t understand
research.
I didn’t understand scientific approaches back then.
Fortunately I got that real early, that you need to test and research and
find out.
Just because Larry Williams or somebody says something’s meaningless.
You’ve got to test and verify, which is all about research.
The more you know, the better you’ll be.

It doesn’t matter if you’re a doctor, a lawyer, a plumber, a ditch digger.
The more you know what hole to use or what shovel to use, the better
you’re going to dig your ditch.
So it’s all about knowledge.
This is a knowledge-driven business.
“You’ve got to test and

verify, which is all
about research.”
Laurent Bernut
alphasecurecapital.com
Podcast Episode 32
Tom Basso and it was really a game changer.
He said “Don’t look at any particular trade, look at any trade as hundreds
of trades behind”.
So it’s basically, changing the focus from outcome oriented to process

oriented.
“Change the focus from

outcome oriented to
process oriented.”
Linda Raschke
lindaraschke.net
Podcast Episode 49
Like which one of 5,000?
I’m writing the world Britannica of lessons I’ve learned from trading.
The importance of really keeping an even keel and steady balance and I
know it’s true with me and I know it’s true with others that you’re going
to perform best when you have the least amount of distractions in your
life.
If you’re in a period where you’re going through a divorce, or moving, or

having an IRS audit, or poor health, or any of these types of issues, even
if you think you have a nice little mechanical system running in the
background, it still needs attention overseeing it.
If you can’t give something your full 100 percent committed time, it’s
okay to step back.
The markets are going to be there every single day, so for me in the
beginning it was very difficult for me to take a vacation.
It was very difficult for me to say no.
There’s a time to close everything out and go away and recharge your
batteries because it is a very compelling game, and it’s a very seductive
game.
If I take a week off it, it takes me 2 or 3 days to kind of get back into the
groove and the flow and like what I like to call my roadmaps.
But it was hard for me to do that many years ago and so as true with
most people, your subconscious is going to say, “Sorry, kiddo. I’m going
to like let some sloppiness creep in and bite you in the butt where you’re
just going to need to take some time off.”
That invariably happens.
I learned that a couple of times way back in the ‘80s but it is important
to step back, regroup, get a fresh perspective, recharge your batteries.
There’s nothing wrong with that.
Same thing with you’re not going to make money sitting in front of the
screen 24 hours a day.
You need to break after the markets close, you need to go out, do some
gardening, walk the dog, or go to the gym. I like to go ride the horse, play
some tennis.
Do whatever it is that you need to do to completely get your head out of

the game.
I think that’s really important to not think about the market for a period
each day.
Other lessons I’ve learned just over time is that you just I think that the
more I’ve been in this game, the more I know that I don't know.
There’s just so much that continues to surprise me and amaze me going

on 36 years now.
You just never can predict how far markets are going to go up, how far
it’s going to go down, these types of issues.
That’s hopefully words of wisdom that can help everybody.
“The more I’ve been in this

game, the more I know that
I don't know.”
Michael Cook
thetradingmasterclass.com
Podcast Episode 39
There are so many lessons and invariably you find over the years that the
answer’s “Yes, kind of,” or “Yeah, but.”
I think probably that markets confound is the overall lesson.
If you ever hear “a market can’t go any higher”, then it can definitely go
higher, and if “it can’t go any lower”, then it could definitely go lower.
“This can’t possibly happen”.
Yes, it can.
“This is free money”.
Invariably, no it’s not, and there’s a lot of implied risk there somewhere.
You just can’t see it.
And also possibly no one else can see it.
So I think those are probably the biggest lessons.
“Markets confound.”
Michael Himmel
essex.us.com
Podcast Episode 23
To be objective, to be objective.
To realize that no matter what, ultimately it comes down to scientific

process and concept.
It comes down to the ability to be dispassionate and to put your own

let’s say belief system or your own biases, especially your own blind
spots to the side and be dispassionate and objective about what you’re
doing and to see it as no more than a quantitative exercise.
“It comes down to scientific

process and concept.”
Michael Melissinos
michaelmelissinos.com
Podcast Episode 56
This might seem a little sappy but if you don’t have a good woman or a
partner by your side, I feel like you’re at a disadvantage.
My biggest advantage is my wife because I get jacked up, draw downs,

losses, and I’ve learned that, “Hey, man. It’s just part of the deal like you
can back-test this all you want but you can’t research and test your
feelings out of it.”
She has helped me over the years because, it’s funny, we have this like
fist pound indicator, where I start losing money, I slam my hand down
on whatever and she’s like a rock.
She keeps me in perspective of, “Hey, it’s just part of the deal. Like you
know this. It’s nothing new. You’ve done this over the years like when
are you going to stop.”
Like I don't know that it will stop, like I’ll get used to losing like never.
Never, it makes my blood boil.
I can’t stomach it.
But I know it’s part of the deal, and I feel like if you have a life set up
around you and the relationships you have around you that allow you to
derail yourself, or people around you that don’t support you, or that give
you feedback and keep you calm or whatever, keep you on track, I feel
it’s only a matter of time before you sabotage yourself.
That’s one thing I’ve learned is that I feel like I have a really good amount
of self-discipline especially coming from sports and taking care of my
health and a lot of stuff, but she is the major advantage that I have.
I think guys in the past, maybe even more when guys are more
discretionary back in the day, they talk about when guys are going
through a divorce or something like that or a death in the family, their
performance suffers.
Obviously, you can create a system that if you follow the rules you can
help that I guess a bit but you still have to follow the rules and it’s not,
“Oh, because I have a system, I always do it.”
No, you can easily not do it, but I feel like if you have that support system
around you, that’s a huge advantage, huge.
“If you have that support system

around you, that’s a huge
advantage.”
Murray Ruggiero
usingeasylanguage.com
Podcast Episode 42
Well, the thing I always say is the markets are a mechanism to take the
most money from the most people to give it to a few people, and that is
the underlying premise of the markets.
So, for example, let’s look at trend following.
Why does trend following work?
Because it’s against human nature to buy when the market continues to
go up, because you figure “Well, I already missed the rally. If I buy now,
the price is going to go down and I’m going to lose money.”
So there’s a fear factor for people to follow a trend, because they’ve

already gotten in late by the time the trend is established, or at least they
think they got in late.
So that’s why trend following works, because it’s hard to do.
So that’s the underlying thing: you have to ask yourselves how is the
market going to hurt the most people and give profit to the insiders.
And if you understand that concept and what scenario is likely to do that,
well, believe it or not, that’s actually the concept the market will follow.
For example, now that there’s all this system trading and everyone can
optimize in TradeStation, a lot of classic systems you can profit doing the
opposites for a short period of time.
I actually came up with a system a long time ago that was based on an
oscillator, and it’s a zero-to-a-hundred oscillator, so it gets overbought
at eighty, and you’re oversold when you get to thirty.
Well, what I did was when I hit eighty, I bought, captured a small piece
of the range, and then exited the trade, and I used a few other filters.
Now, that’s the opposite of what everybody else does, so I called it ‘The
Costanza’, as in George Costanza. Do you remember the Seinfeld where
he decided his life is wrong because he should do the opposite of
whatever inclination he had to do?
And there’s a lot of patterns.
Linda’s Turtle Soup System is like that. You’re buying against the trend,
against the breakout. You’re taking the pullback. You’re expecting that
the market’s going to come down and take out the stops. So you bought
in a twenty-day high and now they’re going to punish those people that
bought at a twenty-day high and retrace to get them stopped out before
the market continues higher.
So, that’s the underlying premise.
You have to ask does this meet that criteria, which is taking money from
the masses and giving it to a few people.
If it goes against your natural inclinations, well, that’s a really good thing.
“The markets are a mechanism

to take the most money from
the most people to give it to a
few people.”
Nick Radge
thechartist.com.au
Podcast Episode 4
Patience.
You’ve got to be patient.
You just need a relatively simple system and apply it over the longer term
and that requires patience.
And when I talk about patience, I’m talking about years, not 20 trades,
not 30 trades, not two months, not 6 months.
It’s got to be years. I once had someone ring me up and say, “If a strategy
doesn’t make money in any 3-month period, it’s useless.” Well, sorry,
but that’s just total hogwash in my view.
And someone like that is going to be spending the next 20 years of their
life searching for something that doesn’t exist.
So, patience, patience, patience is what it’s all about in my view.
“Patience is what it’s all

about in my view.”
Nitesh Khandelwal
quantinsti.com
Podcast Episode 47
So I think the biggest lesson that I have learned through trading or

while I was doing trading is that trading is not just buying or selling.
If you want to be successful in that, you need to treat trading as a

business.
So like in any business, if you want to succeed, you can have certain
competitive edges, so same thing applies here as well, so if you want
“Treat to succeed in trading, if you want a successful trading strategy, then

you need to have certain competitive edges that you need to gather.
trading as a
It can be anything.
business.” It can be your trading strategy itself or the speed at which you can
come up with new ideas, or it can be your infrastructure technology,
or it can be your low brokerage, or it can be the markets that you
can have access to.
It can be anything, but it has to make self-competitive edges that

you need to work towards gathering them to make sure that you are
profitable.
Just like in any business, you will do that even if you are opening a
grocery shop, you will probably look at the comparable advantages
in terms of what kind of rent you’re paying, what kind of location
you have your shop at, how you’re procuring those goods, so it’s the
same thing.
You need to treat it as a business.

Perry Kaufman
perrykaufman.com
Podcast Episode 10
Probably people won't like it but it's accepting risk.
It's having enough money to absorb swings and once I am happy with
the program as I am with the ones that I trade, I don't worry about losses,
I'm going to give the program a lot of latitude because these losing
periods happen all the time.
You have to just become sort of immune to these, accept them as part
of your trading and to do that you have to be capitalized enough.
So you can't start trading with all your money or money that you can't
afford to lose because you would never be able to survive the risk of
these programs and the programs all have risk.
So that's my best advice, it's a long-term learning process to accept risk.
But it's necessary to be successful.
“Accept risk... it’s necessary to

be successful.”
PJ Sutherland
quantlab.co.za
Podcast Episode 62
Andrew, there is no place for ego in the markets [laughter].
Sooner or later, we’re all humbled.
When I started to remove the emotion and ego involved in trading, that’s
when I really started to see my improvements in performance.
I was definitely susceptible to becoming arrogant and confident during

really, really good runs and then very quickly brought back down to
earth.
I guess that all really ties down to psychology in the financial markets,
and lots of good strategies out there but psychology ultimately
determines whether or not you’re going to be successful in the
marketplace.
“There is no place for ego in the

markets.”
Ralph Vince
ralphvince.com
Podcast Episode 11
Oh, things are not what they appear.
This has been a learning process for me from the get go.
And I think even in this discussion there are some questions here that
pertain to things I'm still working on, still trying to solve for myself. And
certain things that I have grown to be quite certain of, that idea of the
necessary criterion.
Along with that is also the idea that you really can't accept things
because they are mathematically accepted.
Remember we spoke of how criterion is everything in this and that's a

function of horizon. And we said when even drawdown, calculation for
drawdown and ruin is a function of horizon. And behind all of this is the
idea of expectation, what you expect to make which is a function of
horizon.
So the idea then becomes, okay for a given horizon is the far outliers, do
we even expect those to come into play and the answer is no.
We don't expect them to come into play… And this idea by the way, I
contend is what belies much of what human beings do contrary to what
classical expectation tells us human beings should do.
It is the reason why you would get in your car and you will drive to the
office today even though you could get killed doing it.
You don't expect to get killed driving to the office today okay.
You really expect that if I’m going to do it 10 million times, I will get killed
doing it but I would end up doing it 10 million times.
And so this idea of classical expectation really do not pertain to us as

individual traders.
“We don't expect the far

outliers to come into play.”
Richard Peterson
marketpsych.com
Podcast Episode 57
The biggest lesson I’ve learned, I guess, is it’s really, really hard to both create
good sentiment data and to find value in it.
So it’s not something that’s easy to play around with.
You won’t find much value in this data unless you use non-linear systems and
know a lot about human behavior and information processing.
It’s very difficult data to use.
That’s a disclaimer and a warning to anybody who wants to get into this area.
I’ve spent twelve years on it and there’s so much more I want to do.
I mean we’re just cracking the surface.
“It’s really,
really hard to both
create good sentiment data
and to find value in it.”
Rob Hanna
InvestiQuant.com
Podcast Episode 7
I guess trading is like life, it happens in

phases.
You're going to have boredom.
You're going to have excitement.
You're going to go through periods

where nothing is going on and you're “Trading is like
going to go through periods where you life, it happens
just losing your mind because you can't
keep up with it all. in phases.”
And normally it seems to go along with
life too I guess.
When you have a lot of personal stuff

going on and you can use a break from
the market, that's when the market gets
exciting.
Robert Bubalovski
tradeview.com.au
Podcast Episode 22
Don’t be too greedy.
Don’t be too greedy and that was taught by the stock broker that I first
started with.
He said to me, “Rob, you guys need to give a little bit back to the markets.
We can’t be greedy, otherwise, he’ll take it all back. So, we need to just
give a little bit back.”
So, don’t be greedy.
“Don’t be greedy.”
Robert Carver
qoppac.blogspot.com
Podcast Episode 26
Through trading systematically, I mean, I’ve learned that I’m not a good
trader, and that’s why I let a system do it for me.
I think very few people are actually cut out to be good traders.
Our brains are wired wrong.
And so I think most people should consider following my example and

trade systematically.
“Most people should …

trade systematically.”
Scott Andrews
investiquant.com
Podcast Episode 18
It forces you to be very intellectually honest.
What I mean by that, it forces you to stick with the facts.
I used to trade when I first started out, and especially when I told you I
had the great year and then I went through that draw down, I was in
denial.
I was completely in denial in my mind even, I didn't want to look at my

results, I just wasn't looking.
I found that if I obsessed over the results the returns didn't come.
So in my mind I felt like OK, I'm going through a little tough stretch here,
but I'll probably about break even.
In reality, I was already – and I was talking about break even from my
highs, so I'd run the count ups. I thought I'm having a tough time here,
I'm probably going sideways, and I was already down significantly. I had
increased my position size too, which was part of the problem.
So you've got to be intellectually honest with yourself.
Stick with the facts, don't play games, you're only going to hurt yourself.
I was a little slow to react to the problem I was creating, giving back all
my profits from the prior year.
In terms of lessons learned in trading that may be helpful for someone

else, I'd have to say losses are part of the game.
Don't try to engineer the losses out of your system, it's going to cost you
way more money, so accept that trade frequency is an important metric;
you don't want to get rid of all the losses. If you do that, you won't end
up with any wins.
I trade more now, like I said at 410 trades in the past 12 months is the
most I've ever done by far.
“Losses are part of the game…

Don't try to engineer the losses
out of your system.”
Scott Phillips
evilspeculator.com/author/scott/
Podcast Episode 59
Everything that made me a good business person or entrepreneur, my

courage, my willing to stick things through, the force of my convictions,
my belief in myself, none of that was relevant to trading markets.
I had to actually change my personality before I could trade successfully,

because I lost before because my personality was that of a market loser.
And so I had to change my personality before I could start to win.
“I had to actually change my

personality before I could trade
successfully.”
Stuart McPhee
stuartmcphee.com
Podcast Episode 15
I have no control over what's going on in the markets.
What I think doesn't really matter much.
You can very easily make mistakes; so I am not giving you the biggest one here, I
am just sort of rattling some off my head.
That one trade can completely undo the 19 really good ones before it, that's been
a really difficult lesson for me.
It's almost unfair, you're really starting to do things well and not making all the
profits but… Sorry not all trades are profitable, you lose some along the way but
you are doing things really, really well and one trade just blows it all up, one trade.
It's like unfair, you think you have to have 10 trades to undo all of that good work
but just one trade can undo all of that; that's a really big lesson, that hurts.
The big lesson maybe is that it's not as easy as you think.
That big lesson is basically everything we have to do is counterintuitive and when

you are starting out it doesn't make any sense whatsoever; and most of the things,
if you do a lot of things intuitively, instinctively, you’ll probably make a lot of very
bad trading decisions so that's probably a very, very big lesson; is a lot of the things
you have to do are very counterintuitive and don't make any sense.
“I have no control over what's going on

in the markets. What I think doesn’t
really matter much.”
Tomas Nesnidal
systemsontheroad.com
Podcast Episode 43
Okay, so first of all, I have learned that trading at least for me is really a
very creative profession and it needs to be treated that way if you want
to succeed.
So I think that most people think about trading like a technical

profession, which by the way is also true, but I think that the key
ingredient you need to add is the creativity.
If you combine a high level of creativity with a high level of technical

abilities, then you can really become a successful trader and get some
really good competitive edge.
I always believe that it’s the creativity and new ideas that you come up
with every day or every week, or every month that helps you to stay in
the game.
“The key ingredient you need

to add is creativity.”
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50 Lessons From Top Traders

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bettersystemtrader.

The trading journey is indeed a difficult and bumpy one!

There are many challenges to overcome and lessons to be learnt.

One of the quickest ways I know to improve at anything faster is to

Follow their path.

And that is exactly what this book is about.

So whether you're a beginner or more experienced trader, approach

“What’s the biggest lesson you’ve learnt through trading?”

The biggest lesson?

There are so many big lessons.

Trading is really hard and I think we covered these lessons.

You need to be very self-aware.

“What’s the biggest lesson you’ve learnt through trading?”

So I think it’s very easy to fall into what’s called

So that’s certainly what I try and focus on.

“What’s the biggest lesson you’ve learnt through trading?”

“There are no certainties

“What’s the biggest lesson you’ve learnt through trading?”

Probably not to take it personally!

You have to get rid of this thinking.

You have to let it go.

“If you start thinking about how

“What’s the biggest lesson you’ve learnt through trading?”

You have to understand why you’re doing something.

I suppose my biggest lesson has been avoiding over-optimization on

And of course it is hard to get away from it.

At least I’m aware of it.

“You have to understand why

“What’s the biggest lesson you’ve learnt through trading?”

Follow your system.

Flip the switch on and get out of the way.

“Follow your system.”

“What’s the biggest lesson you’ve learnt through trading?”

That changes every month, if not every day.

“A tiny, tiny edge, repeated over

“What’s the biggest lesson you’ve learnt through trading?”

So ultimately I think it’s forced me to continue to try to become a better

I suppose that’s probably the biggest lesson.

That’s what it’s done for me.

“Trading will really reveal

“What’s the biggest lesson you’ve learnt through trading?”

Money management, money management.

I had to get my money management under control and introduce

“I blew up twice and almost a

“What’s the biggest lesson you’ve learnt through trading?”

But it’s important to have things in life that

“What’s the biggest lesson you’ve learnt through trading?”

You have to plan ahead of time.

“You have to plan

“What’s the biggest lesson you’ve learnt through trading?”

I can’t believe anything I hear or read.

I have to test it on my own.

“What’s the biggest lesson you’ve learnt through trading?”

From a statistical perspective, what we want to avoid in trading is

That’s the lesson I learned because the converse of that is we don’t

It causes a loss of capital.

“Don’t allocate capital

“What’s the biggest lesson you’ve learnt through trading?”

“You need to be disciplined.”

“What’s the biggest lesson you’ve learnt through trading?”

The biggest lesson is not to be overconfident of a strategy in the

You should always prepare, think about the worst-case scenario.

It would be a good antidote to overcome this.