10 Trading Lessons You Can Learn From Albert Einstein

I believe that traders can learn some useful trading lessons from the motivational quotes by Albert Einstein.

1. “It’s not that I’m so smart; it’s just that I stay with problems longer.”

common trading mistakes
some common trading mistakes

You can’t succeed overnight. Most retail/aspiring traders get hooked on trading because they want money and they want it NOW! Over-trading, scalping, over-leveraging, random decisions, greed and the mirage of getting rich quick will turn trading into gambling.

A common sense rule says that – in order to make a lot of money fast, you either 1) steal, 2) you are a genius inventing or discovering something new, something that everyone will use or buy from you (like Google, Facebook, Angry Birds) or 3) gamble, if you are really lucky.

In most cases, money in the most volatile and sensitive market (FX) is fast only when leaving the wallet, not vice-versa.

Learn from your own mistakes, don’t repeat them, practice and persevere. It doesn’t matter if you count Elliott waves better than anyone else or if you anticipate a rate hike 6 months in advance. It only matters how you control your emotions and your money.

2. “Any man who can drive safely while kissing a pretty girl is simply not giving the kiss the attention it deserves.”

attention while kissing
attention while kissing

Focus your efforts on the things that work best for you. If there is one trading strategy that works for you, then stick to it as long as it works. Don’t waste time testing everything you find on the Internet and don’t listen to everything you hear or read. Too much information can lead to confusion, difficult choices and failure – eventually.

3. “No problem can be solved from the same level of consciousness that created it.”

solving an equation
solving an equation

Losing is part of the game but recovering is not an easy task and requires smarter trading decisions.

Have you ever been on a diet?
Common sense rule, again: if you have gained 40 lbs. (18 kg) in 1 year, don’t expect to lose 40 lbs. in 2 weeks. It takes a lot of work to get rid of them.
So if your trading account is down 50% after 2 months, you’ll have to double your remaining equity to break even. Will that be easy? I doubt.

4. “A person who never made a mistake never tried anything new.”

try something new
try something new

Making mistakes is normal but rather than give up, try to learn something from your own trading mistakes, bad strategies, emotions etc.
If you don’t succeed, you aren’t out of the game.

Make a list of things that didn’t work – check it regularly so you don’t forget them. Avoid them in the future.

5. “Insanity: doing the same thing over and over again and expecting different results.”

repetition
repetition

If you keep doing the same thing and you are constantly losing, it’s obvious that you are doing something wrong. Is your trading strategy constantly giving poor results? Change it. Are you always predicting the wrong market direction? Stop predicting – trade what you see, not what you think or expect.

If you want to achieve different results, then you must change your actions.

6. “You have to learn the rules of the game. And then you have to play better than anyone else.”

a better player
a better player

You must know all the dangers of trading. You must be aware that most things in trading don’t work as advertised.

Outperfoming 90% other traders is easy: just don’t take any trades! :-)

There is only one other participant to your “trading competition”: yourself

7. “Information is not knowledge. The only source of knowledge is experience.”

exercise
exercise

Don’t spend all your time reading all the trading books you find. Practice is king when it comes to trading. Test different strategies and trading approaches until you find one to suit you.

8. “Imagination is more important than knowledge.”

Imagination
Imagination

Imagination allows people to apply knowledge. A person lacking imagination wouldn’t know what to do with his knowledge.

A trader has to know at least the basics of trading to imagine them in a different way, combining tools/indicators/data/etc in various and clever ways to discover better trading systems. Both imagination and knowledge are important and imagination without facts is pure fiction. But once you look at the facts, imagination will allow you to reassemble them in a new way. Never stop being inventive!

9. “Any intelligent fool can make things bigger and more complex… It takes a touch of genius – and a lot of courage to move in the opposite direction.”

complexity
complexity

The more information they assimilate, traders tend to see a situation through complicated eyes.

Was this a break out? Is it wave 4? Is this short-covering or Central bank intervention? Some rating agency downgrading a country? Bernanke talking? More quantitative easing? MA 100 tested? Price breaking through fibonacci extension? Bullish engulfing here, morning star there? NFP better than expected? RSI divergence? ZEW sentiment better than expected? and so on. Does anyone really stay up-to-date with all this stuff? Do you really want to know what’s the reason when the market moves by few points? – A chart full of indicators won’t answer all your questions nor “show you” where the market is going.

10. “Science is a wonderful thing if one does not have to earn one’s living at it.”

trading for a living
trading for a living

And so is trading. If your ultimate goal is to trade full time, you better think more than twice about it. “Trading for a living” became a marketing tool. Many “gurus” are trading for a living, encouraging other people to do so: all they have to do is to buy some books, courses, trading robots then move to Bahamas. It’s THAT simple.

When you have no other source of income and you only rely on speculative gains in the most volatile market, tension will most likely increase dramatically, leading to irrational trading decisions. Never trade money you don’t afford to lose!

This is all for now and I hope it was helpful. Feedback is welcome, post your comments – don’t be shy :-)

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25 thoughts on “10 Trading Lessons You Can Learn From Albert Einstein

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  3. JohnC

    I like the emphasis on sticking with what works and changing what doesn't. It all comes down to emotions. We want to believe that there is a magic cash machine out there and we hate to admit when we are just flat out wrong (must be someone or something else).

    Reply
  4. Casey

    Liviu,

    Great Post and a little humor was added for an additional benefit. I think the best lesson is the one about work so many people want to quit there jobs right away and i say that it is better to work and build up equity while trading. Building a trading account that you don't need to take money out is a good thing.

    This is a great post and I will definitely pass the word around.

    Thanks

    Casey

    Reply
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  6. Tim

    Congratulations on this post, it is terrific!! If I'd read it when I first came into trading, I'd have killed off my delusions and progressed a lot faster as a result. It'll be the very first thing I recommend to anyone I know who wants to get in to trading, hands down. By the way, could you tell me where you found the ' Exercise ' picture, I just love it!!

    Reply
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  8. Conrad

    the same old gratuitous but meaningless advice and rhetoric we keep reading in all these type of articles but don't further one in a. practical sense. yea, lets stop trading was top tip. yet, in the same pages you'll find the courses and subscriptions for tens and hundreds of dollars

    Reply
  9. David Antonio

    This is a very good set of trading lessons that we can learn from, and may I say good set of illustration, it gets your imagination working not your typical boring article, this is really a good one.

    Reply
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  11. Samy

    Found your blog a few days ago and the more I browse it the more I like it.

    8. “Imagination is more important than knowledge.”

    I actually tweet these kind of quotes everyday and the above one is one of my favourites :D

    Reply

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