I wish I’d learned the following 10 lessons before I ever made a single trade. I’d be a much wealthier man if I had.
If you can hammer these lessons into your head, you’ll save yourself from a lot of unnecessary suffering as a trader.
1) Trying to “get a feel” for trading is just an excuse for not putting in the time, study, and commitment to learning a system that actually works.
2) There is no ONE system or philosophy for making a living as a trader. The key is to find the proven system that fits best with your personality. And then stick with it!
3) There IS a “Holy Grail” of trading and it’s called money management.
4) Never enter a trade without a predetermined reward-to-risk ratio of at least 2-to-1.
5) A quality trading system should be able to make money even if the ideal buy point is missed. (Why? See No. 4.)
6) When in doubt, trade smaller. You don’t have to be all in all the time. Sometimes the best thing to do is simply sell half your position. You’ll sleep better when you do.
7) Changing your trading system or trading timeframe will rarely, if ever, fix your trading problems.
8) Successful traders don’t care about other people’s predictions. They follow what the market is actually doing and ignore all the outside noise.
9) Simpler really is better and trading LESS is usually the answer.
10) Check your ego at the door. You WILL be wrong often in this game. The winners know this, so they cut their losses quick and move on. They don’t care about “saving face,” they just want to make money.
10.5) Checking your ego also means not being afraid to ask for help. Losing traders often think it’s somehow embarrassing to learn the strategies other traders have successfully implemented. Don’t let this be you. Most people would be amazed to know how many “pros” subscribe to dozens of different newsletters and services.
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My trading system of choice is the Darvas System and you can follow it with my newsletter, Darvas Trader PRO.