7 Warren Buffet Quotes that Could Revolutionize Your Trading

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Think like Warren Buffet

What Warren Buffet has taught me about Forex

Warren Buffet is a personal hero of mine. His story has always inspired me and he is one of the reasons I do what I do. So here are some of his most famous quotes, with a few thoughts on how they relate to Forex.

1. “Beware of geeks bearing formulas.”

This is a great quote. For the past few years, more and more coders and programmers have flooded into the Forex market. With little to no actual trading experience, they code trading robots and indicators. All these formulas and code usually (or always) amount to nothing, when used live.

Geeks and their formulas don’t meld well with Forex, or other financial markets, especially when the person bearing the formula is not an experienced, professional trader.

2. “If past history was all there was to the game, the richest people would be librarians.”

This one is obvious to experienced traders. What happened last week, month or year or a decade ago will not necessarily repeat itself in Forex.

If you look to the past, for ideas on trading in the future, you won’t be successful. This is why I am a proponent of price action trading. Price action is all about the here and now.

3. “Chains of habit are too light to be felt until they are too heavy to be broken.”

This obviously does not apply only to Forex. However, one of the biggest issues that hurt new traders are bad habits. These come from many different sources. You can have bad personal habits that do not meld well with Forex. If you’re easily stressed, or quick to anger, in day to day life and carry that through to your trading it will hurt you. This is why you should have a strategy in place to nip bad habits in the bud.

Demo accounts are also a major cause of bad habits. Traders who spend a long time trading demo accounts tend to become too open to risk.

4. “Let blockheads read what blockheads wrote.”

I love this quote. There are so many failed Forex traders out there who turn to selling products, because they cannot trade. These guys are marketers not traders. They may be smart people, in general, but when it comes to trading they are idiots. So let the idiots read what the idiots wrote.

5. “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”

This one is self-explanatory. Even though it makes perfect sense it is hard to put into practice. That should not stop you from trying though.

6. “Risk comes from not knowing what you’re doing.”

This says it all and it is a huge problem in the Forex market. So many people come into Forex with absolutely no clue what they are doing. Yet they jump into the market and they get batted around, like a cat playing with a little bitty mouse.

Check out this post in the forum. This guy entered a trade minutes before the release of the NFP, last Friday. That is a massive risk and it is no wonder he lost the trade. The guy simply did not know what he was doing and it cost him.

7. “When you combine ignorance and leverage, you get some pretty interesting results.”

Even though the CFTC has limited leverage for US traders, outside of the US people can still get leverage as high as 500:1. Leverage can be a great aid if you know what you’re doing. However, when you combine a newbie with leverage it almost certainly spells disaster.

What’s your favourite Warren Buffet quote or Forex related quote?

There are many quotes by Warren Buffet and from other inspirational people. Do you have a personal favourite?