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Words of wisdom from Warren Buffett

May 28, 2019
BY Emma Richards

When it comes to increasing your performance as a Forex trader, there’s a lot more to learn about than just indicators and fundamental analysis. To be the best of the best takes a certain attitude and a keen eye for opportunity. Multi-billionaire Warren Buffett started from humble beginnings and built his empire through clever investment choices and hard work. His life lessons gave him a deeper understanding of the global market and the business world in general. With this in mind, we at FX News have put together some of Warren Buffett’s most famous quotes so you can start to see the big picture too.

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Words from Warren

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

Buffett is right. Keeping your money under the mattress gives nothing in return. Like most of us, you probably work for your money. Investing is effectively making your money work for you. CFD trading offers a similar opportunity, and it allows people of all walks of life to get started with a modest budget. Traders and long-term investors can benefit from the compound effect, which can create significant gains, but it requires consistency, good timing, and patience.

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

While greed is a common mistake for new traders, there is a logic in what Buffett is saying. If you’re setting a Buy or Sell order based on what the masses are doing, you’re probably already late to the party. Traders targeting higher profits usually place orders before the trends kick in. Look for opportunities where nobody else is looking, but don’t skimp on your research, and only trade if there are no warning signs. Trading ahead of the crowd can cause rapid losses if you make the wrong call.

“I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”

More great advice for traders new to forex. It’s so tempting to increase your potential gains early in your trading career. Newbies are often on the lookout for that one big win, and while it is possible, we don’t recommend it. Most experienced traders stick to multiple—relatively small—orders rather than relying on one large order.

“In the business world, the rearview mirror is always clearer than the windshield.”

If you look back on any chart, you’ll see a price spike that probably made somebody a lot of money. Checking the fundamental calendar and the news for that day usually provides an explanation for the energetic market move. Hindsight is a wonderful thing. The trick is to investigate every price spike and take notes of the possible causes. The next time you see similar events, you might be looking at a rally or crash.

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

Becoming a professional trader is a lot like building a company. It requires investment, knowledge, patience, and hard work. Climbing a mountain also shares certain parallels with trading. You can take every step with care and see significant gains from the start, but one wrong step and you may fall far and fast. No matter how long you’ve been trading, always consider the worst possible scenario, and set stops and checks to protect yourself… no matter how unlikely it seems.

“We enjoy the process far more than the proceeds.”

That’s easy to say when you already have profits. The key point to take from this quote is that you should enjoy what you do, otherwise you won’t do it well, and you probably won’t do it for very long. Trading requires learning and experience to start making measurable gains, which takes time. If you love the thrill of the win, and the challenge of testing your skills at your leisure, then trading might be perfect for you.

What to take from all of this

Warren Buffett took pocket change and turned it into $84 billion. It’s a success story that very few people could ever hope to achieve. Set your goals realistically and don’t let a single amount drive your trading decisions. Start trading at low volumes and build your portfolio with consistency. Only trade when your technical analysis and fundamental investigations are in harmony. Be brave, but don’t ignore even the smallest warning light. Enjoy the excitement of trading, experiment, test new ideas, and constantly expand your trading knowledge and understanding of the foreign exchange markets.

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Disclaimer: the publication of analysis is a marketing communication and does not constitute investment advice or research. Its content represents the general views of our experts and does not consider individual readers’ personal circumstances, investment experience or current financial situation. Analysis is not prepared in accordance with legal requirements promoting independent investment research and Exness is not subject to any prohibition on dealing before the release of analytics. Readers should consider the possibility that they might incur losses. Exness is not liable for any losses incurred due to the use of analysis. Risk warning: CFDs are leveraged products. Trading them carries a high level of risk, so it is not appropriate for all investors. The value of investments can both increase and decrease and an investor may lose all of their invested capital. Under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by, resulting from or relating to any transactions in CFDs. © 2008—2019, Exness
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