Lessons learned from more than a decade of trading experience:
- Speculating is hard
- No matter how discouraged #1 makes me feel, never forget life is good
- Trade proactively, not reactively
- If it doesn’t feel right, get out!
- If something isn’t working, STOP!!!
- When I’m right, trading is easy. If trading is hard, then I’m doing something wrong
- Often the best trade is to not trade
- Never let a loss affect my life outside of the market
- If too many people agree with me, get nervous
- Trade the trend unless there is an unexpected and compelling reason not to
- What the market isn’t doing is almost always more insightful than what it is doing.
- Take profits when I want to keep holding
- Keep holding when I want to take profits
- When it feels like I’m really good at this, sell everything because something bad is about to happen!
- Put more effort into figuring out why I’m wrong and spend less time justifying why I’m right
- The best trades are often the hardest to place
- If it is too easy to make a trade, then I’m probably wrong
- Long-term success comes from minimizing losses, not maximizing profits
- Don’t swing for the fences: twelve 5% profits leads to an 80% compounded gain*
- I am more successful when I buy early and sell early
- Never give up and never stop learning!
These are mine, what are yours? Share your best lessons and rules in the comments below.
*Compounding works to our benefit in both directions. While twelve 5% profits leads to an 80% gain, twelve 5% losses only results in a 46% loss of equity. 80% gain versus 46% loss, gotta love that risk versus reward.