The sixth commandment of profitable trading is to reduce your risk. If you think you should be risking this much, you probably should be risking that much. The ideal amount to risk on a trade is usually far less than you think because unforeseen events happen. Crazy things happen in the stock market. Markets crash and stocks have bad announcements and earnings, and sometimes there are...
The biggest mistake people make is they think about making money. That sounds counterintuitive, but if you think about how much money you will make as opposed to how much you could lose if you are wrong, you get two very different outcomes. If you start by thinking about how much money you can make, you're all optimistic and thinking, "Wow, this could go to the moon." And, "how much can I...
The fourth commandment of profitable trading is you've got to have a positive edge or a positive expectancy in trading. If you apply your strategy repeatedly, do you get a positive expectation of making a profit? And I want to know if I test my strategy over the last 20 years, do I get like a thousand trades? Are those trades profitable overall on average? There will be many losses and...
The third commandment of profitable trading is to use an approach that suits you. If you're a very patient, long-term considered person, you want a long-term strategy. A long-term strategy is a trading strategy where you buy and you wait through the big major trend, and the stock keeps going up. And then when it's stopped going up and starts going down, you sell and make a profit out of the big...
The second commandment of profitable trading is to use a system. Most people approach the markets the way they approach everything else. They think “I'm pretty smart. I've got some experience. I'll bring that experience to bear, and I'll make some sensible decisions, and then I'll make some money, and then I'll be rich.” But unfortunately, when it comes to trading in the market, what you learn...
The first commandment of profitable trading is you've got to learn the language. If you want to go into a foreign country and function effectively, you need to know the language or translate. In trading, most people come into the markets and think “I'm a smart person. I'll figure it out.” But then they realize that the stock trading is confusing, and so they start to do some research and...
There are a couple of reasons why stock trading is hard. First, most people zoom in way too much. They're looking at five-minute or at one-day charts; and watch social media when Bitcoin jumps six or 7% in a day up. It's like, "oh, it's over, quick, buy before you miss out." But no, Bitcoin fell from 69,000, and it's kissing 20,000 right now. 5% is nothing and it’s not a change in trend. So,...
There's a spectrum on every investing. On one end, the big Wall Street funds have huge supercomputers and trade ultra-high frequency thousands of times a day. On the other end, you are buying a good stock and holding it forever. And in between, there's a whole bunch of different ways of doing it. As individuals, we can't do this high-frequency thing; you can't compete. We can do the long term...
Let me demonstrate the correct way versus the wrong way. Let's say I've got specific rules which might be a bit technical but doable. One thing we do in technical trading is moving averages which is you take the price today, yesterday and the day before, you add them up, and take the average. If the price today is above that average, then it's probably trending up. If the price is below the...
Why You Should Read Quotes About TradingSmart traders understand that the wisdom of others can provide valuable insight and direction. That’s why quotes about trading are so powerful — they offer lessons in mindset, trading strategy, trading psychology, risk management and more that can guide you toward trading success. Consciously learning from people that have gone before you, who are already...
There are good years and bad years. There are easy years to make money, and there are more challenging years. But what you do is you start with broad market behaviour. The market can either be the stock market, crypto, commodities, or any market you want to trade, it can only do certain things. It can go up, sideways or down, in the broader sense. And within those three things, that trend can...
If you think about money, it's emotionally charged. So if you make some money, you would feel great but if you would lose money, you'd feel bad. If someone steals money from you or you get ripped off, you feel sad and angry. We all have this emotion. We also have all the baggage in the past that money things have happened to us. And we have all the fear and greed about these things happening...