Thread by @IMRiskManager

Re-reading The Universal Principles of Successful Trading by Brent Penfold
Will be sharing my earlier tweets on it.
#WeekendReading
#LearningTogether

https://twitter.com/IMRiskManager/status/1116717874368909312

1. If you function only in an environment of certainty & security, like being in a secure relationship or secure job, then trading is not for you.

2. If you are an intellectual who rarely admits to being wrong, then trading is not for you, as the markets have a regular tendency to belittle you and make you wrong.

3. There are no limits to foolishness, when institutional traders can be just as ignorant & clueless about what works in the market as the private trader.

4. There is nothing magical in the 200 DMA, I (Brent Penfold) just use it to determine the dominant trend because I prefer not to place trend trades against it.

5. If you aren’t already, then please become a skeptic when you read trading books. Just because I or any author writes something, doesn't necessarily make it true.

6. Trading’s only real secret is . . .

The best loser is the long-term winner.
—Phantom of the Pits

7. Most traders are bad losers. They hate taking losses, moving stops and they are always looking for any excuse to keep a losing trade alive.

8. Psychology is often provided as an excuse for traders’ failure. However, while it can be a contributing factor, psychology isn't the sole reason.

9. To succeed in trading, you need to cover three important areas:
- methodology
- money management
- psychology

10. Methodology - analysis & trading plan behind why you buy/sell
Money management - amount of money you commit to trades
Psychology - having the discipline to follow your own trading plan.

11 Common mistakes traders make in their beginning years--
From The Universal Principles of Successful Trading

12 Being slow to takes losses and quick to take profits is a recipe for disaster.
- Brent Penfold

13 Most winning traders have learnt---
From The Universal Principles of Successful Trading by Brent Penfold

14 If you can keep your losses small and manageable, and your wins larger than your losses, you’ll stay ahead of the losers’ game.

15 To survive as traders, you will need to look at your business of trading as a business of risk management.

16. The larger the percentage of your trading capital you risk on any one trade, the higher your probability of being wiped out, or your risk of ruin, will be.

17. From The Universal Principles of Successful Trading by Brent Penfold--
Formula to calculate the Risk of Ruin in Trading---

18. Reduce your risk of ruin by
Reducing amount of money risked/trade
Increasing accuracy or win rate
Increasing average win to average loss payoff ratio.

19. Expectancy refers to what you can expect to earn, on average, for every dollar you risk in a trade
Expectancy formula from Brent Penfold book