Want to know how Jason Shapiro, the market wizard, went from being expelled from three high schools to managing hundreds of millions? This trailblazing trader has been changing the financial game since 2003. Today, we’re here to help you grasp his trading wisdom.
In this article, I’ll dissect Shapiro’s top 15 ingenious trading quotes. This will give you a blueprint of his unique strategy and insights. Buckle up and learn how to amass wealth by swimming against the tide!
1. “Trading the markets is very, very, very difficult. If you don’t take that into serious consideration, your chances of earning positive returns over time approach 0 very quickly.”
In this tweet, Jason Shapiro delivers a stark warning: trading in financial markets is no walk in the park.
It’s a complex, intricate game where the stakes are sky-high. Jump in without proper understanding, and your chances of seeing positive returns shrink faster than a snowball in hell.
Shapiro’s words are a wake-up call for traders, a neon sign flashing: “Caution: Deep Market Understanding Needed.” It’s about crafting a robust strategy, being realistic, and not fearing failure. It’s about daring to be different, taking calculated risks, and having your own safety net in place.
Overconfidence? Quick-profit mentality? Leave them at the door.
Shapiro’s advice is a stark reminder that trading is not a golden ticket to wealth. It’s a challenging venture that demands respect.
2. “I succeeded because I have failed so many times, and I had an open mind about failure and was able to learn from it. I failed because I sucked, not because the market was wrong or because someone screwed me, or any of the other excuses you hear.”
This Jason Shapiro quote from Jack Schwager’s “Unknown Market Wizards” is a testament to the transformative power of failure in the world of trading.
Remember when he jumped headfirst into the trading arena and raked in a whopping $700,000 during a bull market? He even splurged on a sleek new Porsche!
But when the market took a nosedive, so did his fortune.
Instead of pointing fingers at the market or anyone else, Shapiro took a good, hard look at himself. He owned up to his mistakes, and this humbling realization was his game-changer. His willingness to embrace failure and learn from it was his ticket to invaluable trading wisdom.
This story is a stark reminder that being a successful investor isn’t just about raking in the dough. It’s about being adaptable, introspective, and resilient. It’s about recognizing that losses aren’t just setbacks—they’re stepping stones to refining your strategies.
3. “I started to look at the data and sort of test that data and really start to use that data pretty extensively from that point on.”
In this Jason Shapiro quote, he’s sharing the importance of COT data in his trading strategy.
Jason’s first dance with the Commitments of Traders (COT) data was after his unsuccessful attempt to short the stock during the 1999 Nasdaq bull market.
Unfortunately, this audacious move didn’t quite pan out. He was swimming against a tidal wave of optimism, but he was missing a crucial piece of the puzzle – the right data.
Enter the COT. This weekly treasure trove of information, dished out by the Commodity Futures Trading Commission, provides a detailed snapshot of the commitments of futures market players.
This data could’ve been Shapiro’s compass, steering him towards smarter investment choices, and potentially shielding him from a hefty financial blow.
After this lightbulb moment, Shapiro dove headfirst into the COT data. To this day, he leverages this savvy approach to spot crowded markets and the profitable opportunities they provide.
4. “You should be able to get where the market’s gonna go up or down right 30% of the time and make money. Because you should make big on the ones you’re right on and you should lose small on the ones you’re wrong on.”
Jason Shapiro has his very own risk management strategy, which involves slicing through Commitment of Traders (COT) data to find crowded markets.
But what is a crowded market?
Imagine a market teeming with speculators, all betting on the same side. Jason sees this as a ticking time bomb, ready to explode into a market reversal. He’s there, ready to pounce when it does.
He waits for news failure – this occurs when the forecasted market trends take an unexpected turn.
And when the market defies the news, Jason swoops in like a hawk. He dives into the market at the close, setting his stop loss below the day’s pivot.
This strategy is his golden ticket, allowing him to cash in on accurate predictions and keep losses at bay when he’s off the mark.
5. “I felt that something was missing in my life. The only thing I could think of was trading. It was what I had done for 25 years of my life, and it was what I was best at. I thought I could be one of the best traders in the world. So why was I not doing it?”
In this powerful reflection, Jason Shapiro peels back the curtain on a time when he grappled with depression.
He traces it back to stepping away from the trading world, a realm he poured 25 years of his life into. Convinced he had what it took to be counted among the world’s elite traders, Jason knew this world was his destiny.
This revelation is a wake-up call to traders everywhere. It’s a reminder that trading isn’t just a job; it’s a calling. It’s about more than numbers and charts. It’s about passion, self-belief, and the courage to chase your potential.
6. “I believe that going against mass participation of the crowd is what’s going to give you good risk-reward trades.”
Jason Shapiro, the contrarian trader, dares to be different. This quote encapsulates his trading philosophy of bucking the trend and profiting from doing so.
And he puts his money where his mouth is, both literally and figuratively. Shapiro’s rebellious streak runs deep, with a rebellious past that includes three high school expulsions.
His offbeat journey proves that contrarian trading isn’t about being different just to stand out. It’s about questioning the status quo, digging deeper to uncover hidden value.
For traders, this serves as a lesson in independent thought, thorough analysis, and the boldness to make potentially rewarding yet unpopular decisions.
7. “While I pay attention to the fundamentals, I only do so in a way to understand what all these other people are trying to think, and why they’re all loaded up on one side of the market.”
Jason Shapiro has cracked the code to understanding the market’s pulse. He’s developed a unique trading strategy that’s all about studying what makes other traders tick.
His secret? Identifying when the market is teeming with activity, whether it’s on the short or long end of a position.
Shapiro believes that the key to unlocking market movements lies in understanding why traders are piling onto one side. He’s convinced that this gives him an edge, a peek into potential market shifts.
And he’s not keeping this strategy to himself. He’s created a vibrant community and a YouTube channel, the Crowded Market Report. Here, he shares his insights, teaching traders how to decode market sentiment and make smart trading decisions based on how crowded a market is.
8. “So I have a process where I basically make one type of trade, and those are the only trades that I make. I have sat in front of these screens for over 30 years and there are other things that I see, but I don’t do them because I stick to what I do and that has served me well.”
His secret to a successful 30-year trading stint? Laser focusing on a single type of trade. If that doesn’t scream consistency and discipline, I don’t know what does.
But why listen to him? Well, Jason Shapiro hasn’t had a single losing year in over two decades. Yes, you read that right. In the trading universe, that’s as rare as a unicorn sighting!
The lesson here for traders is crystal clear: don’t get side-tracked by shiny new opportunities. Sticking to your tried-and-true strategies is the golden ticket. It might be tempting to dabble in different types of trades, but that’s a risky game.
Instead, hone your skills on your proven strategy. This approach not only slashes risk but also sets you on a steady growth path.
9. “If I can then figure out what those people are doing and take the opposite [trade] of them, then I can capture the money they’re losing as my wins.”
This Jason Shapiro quote showcases his daring contrarian trading strategy. He dances to the beat of his own drum, thumbing his nose at the crowd. How does he do it?
He’s got his eyes glued to the news, Twitter trends, and Commitment of Traders (COT) data, studying the majority’s moves. Then, Jason trades in the opposite direction, betting on the crowd’s blunders. This gutsy strategy lets him pocket profits from their missteps.
Shapiro’s approach is a wake-up call for traders. It underlines the power of independent thinking and the danger of blindly following the pack. It’s a reminder that wise decision-making springs from a diverse well of data sources.
10. “If I had to guess, 80% of the time you will wish that you didn’t get stopped. The other 20% of the time will save you from completely going bankrupt.”
Jason Shapiro’s quote introduces us to a savvy risk management strategy that involves setting a stop loss.
This strategy is a trader’s safety net; it’s the predetermined point of loss where a trader decides it’s time to exit a position to avoid further financial damage.
In an article from Business Insider, Shapiro reveals his safety net is set at around 70 basis points. And sure, 80% of the time, traders may face the sting of regret as the market rallies back after hitting their stop.
But here’s the best part: the remaining 20% of the time, this strategy is the hero of the hour, swooping in to save traders from a catastrophic loss of capital. It’s the unsung guardian that keeps bankruptcy at bay.
The key? Win big, lose small.
11. “I don’t get stuck in bad trades; I just get stopped out. I may miss trades because I am stubborn. But I will never, ever violate my stop. So, I don’t get myself in those situations anymore.”
In this quote, Jason Shapiro further underscores the critical role of a stop loss in the volatile world of trading. He stands firm on his golden rule – never breach the stop loss. This tactic is his safety net, an escape hatch from trades that are sinking rather than soaring.
Yes, his unyielding approach might mean he misses a few opportunities. But to him, it’s a small price to pay compared to the potential of a catastrophic loss.
This wisdom wasn’t just handed to him. It’s the hard-earned lesson from his early days in the trading trenches, where he suffered heavy losses, or as traders say, ‘blew out.” If he’d only had a stop loss, this could’ve been avoided.
So, let’s all take a page from Shapiro’s playbook. Let’s be stubborn about our stop losses and save ourselves from the financial abyss.
12. “When investors talk to me about my risk management, they ask, ‘Do you use value at risk?’ I tell them that I don’t because I think it is garbage.”
In this quote, Jason Shapiro casts a skeptical eye on the value at risk (VaR) method in risk management. He deems it as shaky, given that VaR leans heavily on historical correlations, which can stretch from 30 to 90 days or more.
In the wild rollercoaster of volatile markets, these correlations can crumble in as little as 48 hours. As a result, VaR stumbles in painting an accurate picture of the current risk.
By the time VaR catches up with sudden shifts in correlations, it’s often a case of too little, too late to effectively manage the risk. Thus, Shapiro recommends traders like you avoid VaR as a risk management technique.
13. “The COT is not a perfect indicator. There has never been and will never be a perfect indicator. But, because I have lost so much money in the market and made such terrible trades, I physically cannot put on a non-contrarian trade.”
Jason Shapiro knows the Commitments of Traders (COT) data isn’t flawless. Yet, he leans heavily on it.
Why? Because like the legendary Jim Chanos or the famous David Swensen, he’s a contrarian through and through. Jason thrives on going against the grain, keeping a hawk’s eye on bustling markets. COT data? It’s his compass allowing him to blaze a trail away from the herd.
This strategy is forged from his past encounters and his unshakeable belief that trading has no magic bullet indicator. He stands firm in his contrarian stance, shrugging off the whims of market trends.
14. “By definition, everyone can’t make outsized returns. So if everyone is doing something, the only way to make outsized returns is by being on the other side. The great thing about the markets is that I can wait until there is a confirmation before taking the opposite position.”
Jason Shapiro’s quote gives us a peek into his unconventional trading approach.
His philosophy? You can’t beat the crowd by simply following it. Why? Because the market doesn’t allow everyone to outperform. So, to get those enviable returns, you’ve got to dare to be different.
Shapiro waits for the market to show its hand before he makes his move – in the opposite direction. It’s a risky gambit that lets him seize opportunities others might miss. This could lead to bigger wins.
His strategy is a bold reminder of the power of independent thinking and patience in the world of trading. It’s not about rushing in; it’s about waiting for the right moment to strike.
15. “People fail, and they quit; they get scared. For some reason, I have a risk instinct. I hate failing, but I don’t mind taking the risk and then failing.”
Jason Shapiro champions the bold move of embracing risks, even when failure lurks in the shadows. This mindset is a game-changer for traders who often dance on the knife-edge of risky decisions.
Consider Shapiro’s friend, a lawyer who despises his job but is paralyzed by the fear of leaving. This story perfectly encapsulates how the dread of failure can trap us in a cycle of stagnation.
Shapiro urges us to welcome failure, not as a catastrophe, but as a potential outcome of risk-taking. This perspective is a springboard for growth and success in trading.
The lesson here? Dive headfirst into risk, accept that failure might be waiting in the wings, but remember: it’s a stepping stone, not a stumbling block.
Conclusion: Learning from Jason Shapiro Quotes
These nuggets of wisdom from Jason Shapiro reveal the secret sauce behind his lucrative contrarian trading approach. By keeping a keen eye on the crowd’s moves and zagging when they zig, Jason masterfully seizes opportunities that others overlook.
While these quotes offer a helpful glimpse into his trading tactics, there’s still a treasure trove of knowledge yet unexplored. I highly recommend diving into our detailed biography and my interview with Jason Shapiro himself: