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The Road to Financial Success: Lessons from George Soros
The Road to Financial Success: Lessons from George Soros
George Soros is famously known as the man who “broke the Bank of England.” He earned this title in 1992, when he made more than a billion dollars shorting the pound sterling. As the manager of the Quantum Endowment Hedge Fund with more than $27 billion in assets under management, he is deemed a legend of trading and investment and there are many things we can learn from him.
George Soros has a net worth of $8,3 billion, making him one of the wealthiest individuals in the world, according to Forbes. Interestingly, he earned the entirety of his fortune without any initial capital or fund.
Just like all masters of their business do, Soros has his own philosophy and perspective regarding financial markets and investment. Below I cite some of his greatest quotes and the meaning behind each of these sayings.
Markets are Unpredictable – Seize Opportunities
“The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.”
According to Soros, the markets tend to be biased and one can hardly predict when, where, and how prices will move. What is important here is to be prepared for every scenario that can take place and capitalise on the opportunities that may arise.
Trade with a Proper Risk Reward Ratio
So how you can succeed in the markets in this case? Here is another quote from Mr. Soros:
“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.”
What is important to emphasise here is that you can make money in trading even if you do not win the majority of your trades. How? Through proper risk management and risk reward. It’s really as simple as that. Employing a risk-reward ratio in your trading involves setting up your trades in such a way, so that you make for example twice the amount that you have risked (or even more); this system along with proper risk management will reward you over the course of time.
Keep it Elegant and Simple
Interestingly, Soros is mainly known as a short-term speculator. In practice, this means taking highly leveraged trading positions on the direction of the underlying markets. And here is the philosophic background for it:
“The market is a mathematical hypothesis. The best solutions to it are the elegant and the simple.”
The moral of keeping things simple in life generally pays off, and investing is no exception to this. Soros has built his financial empire by abiding by this rule. Obviously, a simple, clear and effective trading strategy certainly outdoes a complex system that does not work.
Markets Tend to Fluctuate – Study Them Well
At the same time, the nature of markets is not to be overlooked. This is Soros’ perspective on this:
“I put forward a pretty general theory that financial markets are intrinsically unstable. That we really have a false picture when we think about markets tending towards equilibrium.”
Soros advocates that markets do not tend towards equilibrium, on the contrary, they are subject to fluctuations and periodic crises. Equilibrium is merely a false assumption when looking at markets. This means that a good investor should have a good understanding of risk.
Risk Properly
“Risk taking is painful. Either you are willing to bear the pain yourself or you try to pass it on to others. Anyone who is in a risk-taking business but cannot face the consequences is no good. There is nothing like danger to focus the mind, and I do need the excitement connected with taking risks to think clearly. It is an essential part of my thinking ability. Risk taking is, to me, an essential ingredient in thinking clearly.”
if you don’t enjoy taking risks, specifically financial risks, you can hardly survive as a trader. Risk helps focus the mind he says, in a similar way, I feel like I am keener and more aware of the market when I have money at risk. But there is a fine line between being focused and being over-involved and over-trading. Risk can make you stay focused, but you don’t want to spend all your time watching the charts.
Moreover, you must really love this ‘game’ to thrive at it. Some people are just not mentally cut out to take financial risks and be able to operate effectively in the market with their money on the line.
Investment Requires Rational Thinking
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
To thrive in trading, you should be emotionally detached from it and simply base your decisions on sound judgement, consistency and discipline.
These are just some of Soros’ greatest quotes that point to his unique way of thinking and well-developed business mindset. I hope you got a great deal of inspiration and make good use of his ideas in your own trading.
Happy Trading
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Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.
Why Trading Discipline Is The Key To Profitability
What’s wrong with deviating from your forex trading plan if you make a profit anyway?
Making an occasional winning trade, even when you throw your trading plan out the window, may provide short-term pleasure, but entering trades haphazardly can adversely influence your ability to maintain discipline in the long term.
Trading is a marathon, not a sprint!
When you stop following your trading plan, you become rewarded for lacking discipline and you may start believing that abandoning a trading plan is no big deal.
An unjustified reward may increase your tendency to abandon trading plans in the future.
You may be prone to think “I was rewarded once, maybe I will be rewarded again. I’ll take a chance.”
But the positive outcomes of undisciplined trading are usually short-lived, and a lack of discipline ultimately produces the long-term trading losses.
It’s important to distinguish justified wins from unjustified wins.
A justified win is when you create a very detailed trading plan and FOLLOW the plan. A win that results from following a trading plan is justified and reinforces discipline.
An unjustified win occurs when you make a plan but don’t follow it or if you have no plan at all. You might be rewarded, but the outcome occurred by chance.
You might as well flip a coin or hang a printed copy of your charts on the wall and throw darts at it to help you make trading decisions. The win is unjustified and can reinforce undisciplined trading.
Maintaining discipline is vital for consistent and profitable trading.
You trade proven forex trading strategies, over and over, so that across a series of trades, the strategies work enough to produce an overall profit.
It’s like making shot after shot on the basketball court so as to accumulate a winning number of points. The more shots you take, the more likely you will amass points. Just look at some of the most successful athletes in the world.
The winning player is the person who first develops the skill to make the shot consistently so that at every possible opportunity, the ball is likely to go through the basket or goal posts.
They’ve developed the skill to learn how to shoot the ball the same way every single time. Consistency is crucial!
It’s the same for trading. One must trade consistently, following a specific trading plan on each and every single trade.
If you trade one approach this time, and a different approach at another time, your performance will more than likely be haphazard.
If you follow the plan sometimes and abandon it at other times, you throw off the probabilities, and you will most likely end up losing overall.
3 Tips To Help You With Building Your Discipline
1. Remain Consistent At All Times
Don’t let unjustified wins interfere with your ability to maintain discipline.
2. Follow Your Own Trading Plan
Follow your trading plan and cement in the mindset that if you follow your plan, you will end up more profitable in the long run.
3. Have A Clearly Defined Goal
Have clearly defined goals for all your trades. Know when you will exit a trade and set your profit targets. It is very important to understand goal setting in forex trading and pairing it with a consistent risk to reward ratio.
Happy Trading
Want to join the MyFXMentor Team? See trades taken by our top trading analysts, join our live trading chatroom, and access our strategy library! Simply contact us on bookings@myfxmentor.com
// MY FAVORITE BROKERS
// SOCIAL MEDIA PROFILES
Instagram: https://www.instagram.com/myfxmentor/
Facebook: https://www.facebook.com/myfxmentor
Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.
THE POWER OF PATIENCE IN FOREX TRADING
Whether being a trader is your full-time job or you wish to get an additional return on your savings, investing on the FOREX market involves carefully thinking about which trading strategy you will implement based on your capital, your time horizon, your risk aversion, your money management, your psychology etc.
Whatever the case, each investor should try to answer the following question:
How can I make consistent profits with FOREX trading?
THE POWER OF PATIENCE IN FOREX TRADING
Understanding how important patience is while you start learning to trade will completely change the trajectory of your performance in the long run and help you achieve your goals faster. But before trying to figure out what your trading plan will be, you should first think about why you want to trade: What are you doing this for?
Once you know the reasons why you want to learn how to trade and you have set some goals, you need to understand that there is no quick way to make money while trading. Learning how to trade requires hard work, knowledge, discipline, commitment, dedication and above all patience.
The power of patience shouldn’t be underestimated while learning how to trade, it’s a vital characteristic a trader must have to be successful in the long-term.
Because the FOREX market is very volatile and is open 24hours, 5days a week. A lot of traders decide to use the “scalping trading” method, opening themselves up to the risk of being overexposed. Scalping is a trading strategy used to take advantage of small prices’ variations. This is one of the most aggressive trading strategies around, because traders are aiming for a lot of small quick profits.
Being patient is crucial for those traders, as without it, they are liable to overtrade.
It is not necessary to constantly be in position and believe that you must invest in every price’s movement, or that there is money to make on every single trade. Sometimes the currency pair you are working on will evolve within a sideway consolidation for a while without giving relevant signals.
You must then know how to be patient and open a position only with trades that have the most bullish or bearish potential (breakouts patterns, trend reversals signals). The ability to wait for a technical configuration, a market opportunity to present itself, or to maintain an opened trade until prices reach your goals, will all help you outperform the average trader, who trades on emotion.
Don’t worry about missing the boat and accept the fact that being on the sidelines and waiting is an essential part of trading. It’s a sign of strength and control, not a sign of failure.
You can also observe how patience is important while dealing with losses or gains. Everything is about trusting your trading plan and the strategy you decided to apply.
Observe the way you manage your winnings. It’s easy to close your position when you’re making a lot of money. Is it the right thing to do? Not necessarily, especially if your target price hasn’t been reached yet: this means that there is certainly still an upside potential according to your trading system (or downside potential if you are short).
Nearly 90% of traders take profits too early because it’s easy to do – and the same percentage of traders lose money at the end of the year because they do what is easier…
If you are too stressed and if you have trouble controlling your emotions, you’ll tend not to trust your trading plan or your analysis. You will want to close your position relatively quickly, regardless of the messages conveyed by the technical indicators or your chart analysis. Despite earning potential, you will be impatient and you will decide to close your position because you’re following your instinct and not your analysis.
Once the position is closed, you will often realize that it goes back in positive territory and ends up in the direction you had anticipated and you could have won if you were more patient.
It is therefore very important not to react impulsively to situations or let your emotions dictate your behaviour.
You can dramatically improve your chances of success in trading by simply having the patience and discipline to wait for the right opportunity and follow the trading plan you’ve worked on and back-tested.
Happy Trading
Want to join the MyFXMentor Team? See trades taken by our top trading analysts, join our live trading chatroom, and access our strategy library! Simply contact us on bookings@myfxmentor.com
// MY FAVORITE BROKERS
// SOCIAL MEDIA PROFILES
Instagram: https://www.instagram.com/myfxmentor/
Facebook: https://www.facebook.com/myfxmentor
Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.