Trading methods and systems are only a small part of trading success. Any method’s weakest point is the trader. If a trader trades too big and too often, no trading system will work. A great trading system will fail if the trader lacks the discipline to trade the entries and exits. Fear, greed, and ego enter the system, and the system is doomed to fail. Here are 10 Edges for Traders in order to join the 10% of profitable traders. With them, even a simple trading system can make money. Without them, no trading system will work in the long run.
10 Edges for Traders
- Keeping losses to a minimum is a short advantage. Only having a few small losing trades will keep you from losing a lot of money.
- Allowing a winning trade to run as long as it can is a significant advantage over most traders. Having a few big winning trades will boost your overall profits.
- Limiting the total amount of capital you will lose on any one trade will keep your account intact, giving you an advantage over those traders who will eventually blow up their trading account.
- By limiting the emotional impact of any one trade, proper position sizing will allow you to maintain your correct decision-making process. This gives you an advantage over many others who become panicked during a big trade and make a hasty decision.
- Having the discipline to stick to a trading plan is an advantage over many others who make decisions based on their feelings and opinions.
- It’s a huge advantage to have the confidence and faith in your trading method to stick with it even when you’re losing money. Most people switch to new methods as soon as their old one stops working.
- Only trade a system after you’ve done your homework and done chart studies and back testing to make sure it’s profitable.
- The edge that separates much of the profitable 10% from the unprofitable 90% is only placing entries based on actual system signals and never on fear or greed.
- The majority of successful traders place trades in response to actual price action rather than just their opinions, and this usually makes all the difference.
- A trader who is only interested in making money has a significant advantage over someone who is only interested in proving their point.