3 Principles of Professional Traders


It is about having a set of rules in place and then executing and following those rules.

  1. Your method has to have a positive expected value. This is derived from the 5 elements below that together form a set of rules to use for each trade. All of these elements work together as one.

Each of these needs to be in place BEFORE the first trade:

 Entries
 Exits
 Stops
 Position Sizing
 Risk Management

  1. It is important to have a plan/model you can follow and one that is aligned with your personality. What works for myself or others will NOT work for you. This is the part that most new traders do not understand. Every so often a trader gets lucky and makes money without following a plan but that does not last long. You have to be able to follow the rules and enter all the trades the same way every time. This is impossible to do if you do not understand them or if you do not believe in them. You need to trust the process and let the trades play out.

  2. You have to always have your emotions in check and in order. If you have major changes going on in your life such as a new baby, divorce, death, or anything else that can be destabilizing, then it is usually best to take some time off from the markets and trading. Many of the great traders have something else they focus on outside of trading to help them keep their mind clear and focused. If your emotions are off and unbalanced it will definitely show up in your trading. You are the most critical part of the trading system and edge. I like to take walks throughout the day and also meditate at times to clear my thoughts and become centered. Trading requires laser focus and will power and the human mind and body can only be on top of it's game for so long before fatigue sets in.

Post edited by JoshWinter on
Always a Student. B)


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