Here are the 18 principles of successful trading that I have learned from the study of rich traders and my own successful trading in the markets over the past 12+ years. Some of these principles will seem counter intuitive and may leave new traders scratching their heads until they fully understand what they really mean.
New Traders are greedy and have unrealistic expectations. Rich Traders are realistic about their returns.
New Traders make the wrong decisions because of stress; Rich Traders are able to manage stress.
New Traders are impatient and look for constant action. Rich Traders are patient.
New Traders trade because they are influenced by their own greed and fear; Rich Traders use a trading plan.
New Traders are unsuccessful when they stop learning; Rich Traders never stop learning about the market.
New Traders act like gamblers; Rich Traders operate like a businessperson.
New Traders bet the farm, Rich Traders carefully control trading size.
For New Traders outsized profits are the #1 priority, for Rich Traders managing risk is the #1 priority.
New Traders try to prove they are right. Rich Traders admit when they are wrong,
New Traders give back profits by not having an exit strategy. Rich Traders lock in profits while they are there.
New Traders give up and quit, Rich Traders persevere in the market until they are successful,
New Traders hop from system to system the moment they suffer a loss. Rich Traders stick with a winning system even when it’s losing.
New Traders place trades based on opinions. Rich Traders place trades based on probabilities,
New Traders try to predict. Rich Traders follow what the market is telling them.
New Traders trade against the trend; Rich Traders follow the markets trend.
New Traders follow their emotions which puts them at a disadvantage. Rich Traders follow systems that give them an advantage.
New Traders do not know when to cut losses or lock in gains, Rich Traders have an exit plan.
New Traders Cut profits short and let losses run. Rich Traders let profits run and cut losses short.
For a more expanded explanation of these principles and examples of why they work, check out my book New Trader, Rich Trader.