The Top 10 Greatest Traders - Best Trading Quotes Rules and Strategies Reviewed

Deciding who the top ten traders are is a subjective trade in itself. In determining the top ten traders one has to consider what trading environment the trader was in. Great traders are their own man or woman, that is not part of the herd. That is what stands them out. The books market wizards 1 and 2 give us great insight into great traders. These are must reads for investors and traders trying to grasp the concept of traders psychology. At the end of the day controlling ones emotions and harnessing the evil twins, greed and fear is what determines your success.

The top traders we have selected traders from the past to the super traders that shone between 2000-2010. Insightful quotes from W.D. Gann and Jesse Livermore are golden. John Paulson of the greatest trade ever and energy trader John Arnold take us into the current financial cyclone. Remember the list is subjective. We have selected trading quotes that will help understand their mindset, be inspirational, help you develop your investment strategy and help you understand the mechanics of the markets.

W.D. Gann, the market master, wrote books and courses dealing with stocks, commodities, support and resistance, cycles, the law of vibration, Gann angles (the Gann fan), the Square of Nine (the Gann Wheel), the Hexagon Chart, squaring of price and time, and more. Gann was a Mason and Shriner and what he learned in those lodges is inseparably woven into his trading ideas. Although he has his detractors, few can argue that WD Gann wasn't one of trading's all time Greats. He's right up there with the others such as Jessie Livermore, Richard Wycoff and a handful of others. Here are some of the noteable words of wisdom Gann left us.

W D Gann Quotes

"TIME is the most important factor in determining market movements and by studying the past records of the averages or individual stocks you will be able to prove for yourself that history does repeat and that by knowing the past you can tell the future.

Every movement in the market is the result of a natural law and of a Cause which exists long before the Effect takes place and can be determined years in advance. The future is but a repetition of the past, as the Bible plainly states: `The thing that hath been, it is that which shall be; and that which is done is that which shall be done, and there is no new thing under the sun.' -Eccl. 1:9

There is a definite relation between TIME and PRICE. … Now, by a study of the TIME PERIODS and TIME CYCLES you will learn why tops and bottoms are found at certain times and why Resistance Levels are so strong at certain times and bottoms and tops hold around them.

"The most money is made when fast moves and extreme fluctuations occur at the end of major cycles."

"Mathematical science, which is the only real science that the entire civilized world has agreed upon, furnishes unmistakable proof of history repeating itself and shows that the cycle theory, or harmonic analysis, is the only thing that we can rely upon to ascertain the future
Thus, I affirm, every class of phenomena, whether in nature or in the stock market, must be subject to the universal law of causation and harmony. Every effect must have an adequate cause. "

Paul Tudor Jones Has accomplished what many though impossible: combined five consecutive, triple-digit return years with very low equity retracement. Took a $1.5 million account in 1984 to $330 million account in 1988.

• Don't focus on making money; focus on protecting what you have.
• I know that to be successful, I have to be frightened.
• 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 draw down. Hopefully, I spend the rest of the day enjoying positions that are going in my direction. If they are going against me, then I have a game plan for getting out.
• Don't be a hero. Don't have an ego. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead.
• If I have positions going against me, I get right out; if they are going for me, I keep them... Risk control is the most important thing in trading. 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.
  
  

Ed Seykota is one of tne of the legendary traders of our time. Seykota realized an astounding 250,000 % return on his accounts over a sixteen year period. Seykota gives great insight in the basics of his success.

• 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.
• Everybody gets what they want out of the market.
• The trading rules I live by are:
  1. Cut losses.
  2. Ride winners.
  3. Keep bets small.
  4. Follow the rules without question.
  5. Know when to break the rules.
• Be sensitive to subtle differences between 'intuition' and 'into wishing.
• So you didn't have a clear exit point) In other words, the only way you could stop trading was by losing.
• The elements of good trading are:
  1. Cutting losses,
  2. Cutting losses, and
  3. Cutting losses.
  If you can follow these three rules, you may have a chance.
• Trying to trade during a losing streak is emotionally devastating. Trying to play "catch up" is lethal.
• There are old traders and there are bold traders, but there are very few old, bold traders.
  
  
  

John Maynard Keynes is the most renown economist of the 20th century with his use of politics and philosophy.when analyzing macroeconomics. Keynes was also one of the greatest traders of the 20th century. It didn't start out well getting wiped out when he was 36 from over leverage. Like all great traders he learnt from his losses and his trategy developed over time with cycle, contrarian investing and value investing.

Over a 20 year period.Keynes averaged a 12% annual return

John Maynard Keynes Quotes

• It is the one sphere of life and activity where victory, security and success is always to the minority and never to the majority. When you find any one agreeing with you, change your mind. When I can persuade the Board of my Insurance Company to buy a share, that, I am learning from experience, is the right moment for selling it.

• Markets can remain irrational longer than you can remain solvent.

• Successful investing is anticipating the anticipations of others.

• The importance of money flows from it being a link between the present and the future.

• The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelope our future.

• There is no harm in being sometimes wrong- especially if one is promptly found out.

George Soros over the last part of his life has delved into politics dividing opinion about him. What shouldn't be forgotten he began Quantum Fund with Jim Rogers and had phenomenal success. His claim to fame is the billion pound sterling short profit but his ideas of market chaos, equilibrium and reflexibility are all cutting edge and valid.

George Soros Quotes

• Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.

• It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.

• Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.

• Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs.

• The worse a situation becomes the less it takes to turn it around, the bigger the upside.

• The markets are always on the side of exuberance or fear. It's fear and greed. Right now greed has the better of it, which is rather nice (for investors) as long as it doesn't get out of hand

• I think I lost my touch some time ago. I'm like an aging boxer that should not go into the ring

Jesse Livermore wrote an all time classic book on trading and specualting; 'How to Trade in Stocks'. One was one of the old breed who became a legend in his own life time. Here are some most insightful quotes from Jesse Livermore.

• Investors are the big gamblers. They make a bet, stay with it, and if it goes the wrong way, they lose it all.
  
• The spectator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you, you hope that every day will be the last day and you lose more than you should had you not listened to hope. And when the market goes your way you become fearful that the next day will take away your profit, and you get out too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit.

• It never was my thinking that made big money for me. It was always my sitting. Got that? My sitting tight!"
  

John Henry in later life is known as the successful owner of the World Series with his Boston Red Sox. It all started when John W Henry failed to graduate from university and got into the futures trading business with his market trends system using only data and no human emotions. In 2007 his net worth was put at $840.

John Henry Quotes

• Life is too dynamic to remain static.

• We can’t always take advantage of a particular period. But in an uncertain world, perhaps the investment philosophy that makes the most sense, if you study the implications carefully, is trend following. Trend following consists of buying high and selling low. For 19 years we have consistently bought high and sold low. If trends were not the underlying nature of markets, our type of trading would have very quickly put us out of business. It wouldn’t take 19 years or even 19 months of buying high and selling low ALL of the time to bankrupt you. But trends are an integral, underlying reality in life. How can someone buy high and sell low and be successful for two decades unless the underlying nature of markets is to trend? On the other hand, I’ve seen year after year brilliant men buying low and selling high for a while successfully and then going broke because they thought they understood why a certain investment instrument had to perform in accordance with their personal logic.We stick to our knitting.

From the book “Trend Following” by Michael Covel John W. Henry’s president cited these rules.

• Most people don’t have the discipline to do what they need to do.
• We like to keep it sophisticatedly simple.
• Our best trading days are when we don’t trade.
• We make more money the less we trade.
• Some of our best trades are when we are sitting on our hands doing nothing.
• We don’t want to be the smartest person in the market. Trying to be the smartest person in the market is a losing game.

Jim Rogers has achieved fame from his bets on China, commodities and his moving to Singapore from the U.S. James B. Rogers Jr started trading in 1968 with $600, five years later he and partner George Soros formed the Quantum Fund.

He retired in 1980 and has continued to amass his wealth. He has published a series of books, started new funds and is often on TV.

Jim Rogers Quotes

• One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do.
• The first loss is the best loss.
  
• Trade as little as possible.
• Successful investing means getting in early, when things are cheap, when everything is distressed when everyone is demoralized. To make a killing, you really need to get in during a time of despair.
• I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.
• Buying options is another fast way to the poor house.

John Paulson is known for his hugely successful bet where he made $20 billion on sub prime mortgages blowing up and was the subject of 'The Greatest Trade Ever" by Greg Zuckerman of the WSJ.

John Paulson Quotes

• This [market] is like a casino .... Is there a bubble we can short?
• Generally, while it is important to reduce exposure or close out the deal if the risk is serious, it is equally important not to panic.

The Greatest Trade Ever Condensed Paulson's 8 secrets to success.

1. Don't follow the crowd.
2. Have an exit strategy before the bubbles burst
3. Focus on the debt markets for predicting the future.
4. Take the time to figure out how fancy new investment products like credit default swaps (CDS) work.
5. Buy insurance. No one wanted out of the money puts on the housing market.
   
6. Remember the past. Some of the big winners in the housing crash were those dismissed as out-of-touch dinosaurs.
7. Remember that no trade lasts forever so don't fall in love with your investment. After making his $20 billion. Paulson went long banks at the bottom. (The verdict is still out on this trade).
8. Timing is everything and luck helps.

John Arnold is the youngest on the Top 10 list and is known as the King of Natural Gas. At only 36 years of age Forbes estimated Net Worth at $3.3 B in September 2010.

John Arnold rarely talks so we have limited quotes but some insightful comments on his strategy included.

John Arnold Quotes

to place bets on a market that he determines is ‘biased’ ... [W]e ask ourselves can we identify what is forcing a market to price a product at an unfair value, and then, what will push it back to fair value."

"I try to buy things whenever they're trading below what [our] analysis shows to be fair value and sell things whenever our analysis shows that the forward curve is higher than our analysis of fair value

Arnold's strategies and successes as relayed by colleagues and commentators.

• "He only really puts on a trade of substance once or twice a year," says a person familiar with his fund Centaurus "But when he goes for it, he's so big he makes a fortune each time."

• While others panicked Arnold had remained patient, waited until the right moment, and then opportunistically relieved others of their money. The best compliment may have come from a competitor who once described Arnold and his trading team to reporters as "like being on the Yankees, and he's Babe Ruth.

• Arnold's fund has been closed to new investors since 2005. He has repaid nearly all his investors and now invests only his and his employees' capital. "He and those lucky enough to be in his inner circle have a huge edge in that they can do whatever they want," says a commodities fund placement adviser.

This run down on the Amaranth $9 billion commodities hedge fund debacle gives a good understanding of this strategy. Amaranth placed huge bets that natural-gas prices would rise in the winter, however meteorologists began predicting a mild winter and prices tumbled. Amaranth faced $3 billion in margin calls.

Amaranth trader Hunter e-mailed Arnold to try and persuade him to buy Amaranth's positions before Monday's market. Arnold explaining that he had been out of the office told Hunter prices was "still a long way from fundamental value." Arnold argued. Arnold had the appropriate short positions for that move down and was "remarkably accurate," according to a Senate report. Centaurus made 200% gains that fall, Amaranth was forced to liquidate.
Centaurus's netted nearly $1 billion over that quarter with a reported 317% return overall for Centaurus in 2006.

Make sure you vote on who you rank as the top ten trader in the Top 10 trader Poll. Feel free to add any comments on the top 10 greatest traders. Any other traders left off the list?