The Trifecta of Trading






If you want to be a winner trading in the long run there are THREE things that you must do. If you do these three things you can not lose in the long term, if you are missing one you will likely not last very long as an active trader. These three simple things work together to keep you profitable in the markets.

#1 You must trade a WINNING method: Your trading system must be valid and profitable through past markets. The best way to win in the markets is to have a method that identifies trends and gives you entries and exits that put the probabilities on your side for winning trades. Many times these systems will have huge winners that pay for all the small losses and make you profitable.

#2 You must manage RISK: Even with a winning system betting too big on one single trade can ruin you when it goes wrong. Betting even 10% or more of your capital on any one trade can ruin your account with 5 straight losses. To really succeed you have to lower your risk to 1% of total capital, this does not mean to trade with 1% of your capital it means to set stop losses and position size carefully so that if you are wrong you will only lose 1% of your account. Even if a real disaster happens you may still only lose 2%.  This is how traders survive for the long term through losing periods.  A $50,000 account=$500 maximum loss per trade.

#3 You have to have the right MIND SET. To win in trading you must have faith in yourself, your system, and your method. If you are a trend follower you must believe that trend following is the most profitable way to trade, you must believe that your system is a winner because of the back testing you have done on price history or charts based on your rules. You must have faith in yourself to do the right things and remain disciplined. If you lose money you must understand that it is just part of the game and that you will make in back.

If you have these three things, nothing can stop you, if you are missing any of these three things nothing can help you.