Jim Rogers is well known, to many watchers of financial news programs as the witty and entertaining guy with the bow tie and while he is always good fun to watch, he is also, one of the world's best traders and in this articles, we will look at his trading technique and get some tips, all traders can use for profit.
Rogers is Chairman of Rogers Holdings and is most famous for setting up the Quantum Fund with another legendary trader George Soros. The fund is probably one of the best known funds of all time, was set up in 1973 and enjoyed spectacular success. Over a 10 year period, assets under management increased by 4200% while the S&P 500, made under 50%. The Hedge fund was one of the first, to see the big picture and trade with a worldwide trading strategy. One of the keys to the success of the fund was, to note correlations between markets and different assets and seek out and zero in on the best opportunities.
So what makes ,Jim Rogers one of the top traders of all time and what can we learn from him? Lets take some famous Jim Rogers quotes and discuss there signifcance, in terms of making long term profits in the markets.
Tips on Making Money from Jim Rogers
“One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do…They just can’t sit there and wait for something new to develop”. (Jim Rogers)
If you learn to be patient when trading, you will make bigger profits, have less risk, be less stressed out and spend less time on your trading strategy but make bigger profits. Patience in my view is one of the key traits needed to make consistent long term profits from the markets.
Most traders want to trade and make the markets give them money but trading doesn't work like that – if you trade just becuase you feel you should be doing something, you will lose because you won't be focusing on the best chart set ups. Also keep in mind as soon as you put a trading signal in the market – your money is at risk and its prudent ONLY to put money into a currency pair when you have the best chance of winning – there is an old saying which is the “best trade is no trade” and if you learn to prasctice it you will make better returns and have less in the way of drawdown.
The hype around Forex is all to do with making quick money and using scalping or day trading strategies to do this but this is what the losers do. Winners are patient and wait for the best opportunities to occur. I think the quote below neatly sums up the advantages of being a patient trader:
“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. Even people who lose money in the market say, “I just lost my money, now I have to do something to make it back”. No you don’t. You should sit there until you find something”. (Jim Rogers)
"My basic advise is don't lose money" (Jim Rogers.)
It's true of course and money management is thr foundation, any successful trading strategy is based on but there is no practical advice in the above quote but there is on learning the basics and to think about what your doing and if you do, you will end up with a successful trading system.
The Importance of Knowing the Basics and Thinking for Yourself
Most traders dont study the basics and bother to learn the real facts about trading. Instead, they fall for the myths the crowd believes and of course – the crowd, awlays end up losing:
“Never act upon wishful thinking. Act without checking the facts, and chances are that you will be swept away along with the mob.” (Jim Rogers)
If you study the markets and learn how and why, they really work, you will avoid the traps of crowd thinking and avoid tradinng techniques whcih lose money which are discussed elsewhere on this site.
Dont Try and Understand – Observe Think Act Contrary
“Acknowledge the complexity of the world and resist the impression that you easily understand it. People are too quick to accept conventional wisdom, because it sounds basically true and it tends to be reinforced by both their peers and opinion leaders, many of whome have never looked at whether the facts support the received wisdom. It's a basic fact of life that many things "everybody knows" turn out to be wrong.” (Jim Rogers)
Many people look at the market and think they move to logic and order but the problem with this view is - there is no logic and no order. The market is a group of humans which respond as much to greed and fear, as the facts so its a volatile and unpredictable arena to try and make money in.
Forget Perfect Market Timing
“I am not the best person to ask, you know I am terrible at market timing” (Jim Rogers When asked if he thought the Dollar was going up)
Most traders want perfect market timing and are always trying to buy bottoms and sell tops. These traders end up losing their trading accounts. What Jim Rogers is saying above is he is not terrible at market timing really, he just is prepared to miss a bit of the move to confirm his trading signals are executed in trends in motion – the market turn or trend need to be confirmed before he acts.
This is sound basic advice for any trader - always get confirmation of trading signals in terms of, trend direction before placing them in the market. Don't try and get all the trend and predict makret turns its impossible, just try and get in, when the risk reward is at its best and you will make money long term with your trading strategy.
Long Term Trend Following for Profit
"I haven't met a rich technician" (Jim Rogers)
Jim is a long term trend follower and this means he pays more attention to the fundamentals than the technicals but think the above quote is a bit “tongue in cheek” as he does admit to looking at charts for value purposes. In terms of trading strategies, I actually like a technical system to time but like to know the bullishness or bearishness, of the long term fundamentals because they show up in the big trends on a chart. If trend following, it helps to know the big picture behind the charts.
Believe in Yourself
“Swim your own races.”
The above really means – do your own thinking and if you do, you will be surpised at what you spot that others don't. If you have done your homework, understand the crowd and trade without emotion, you will soon learn to trust your judgement on trades and avoid the losing majority.
He's a clourful character and now lives in Singapore and is one of the top traders of all time and the quotes above are great tips for profit. I would also strongly advice you read the excellent interview with him, in the book Market Wizards by Jack Shwager.