In trading less is more, less activity generally leads to more profits and smaller positions sizes leads to better odds of keeping profits over the long term. Less activity in trends allows an easier way to make money. Less position size leads to smaller losses when wrong.
It is better to specialize in trading, pick a market, pick a method and master it. It is better to be a master of one set up, pattern, stock, market, or system, than to dabble in many.
Trading is not about being right all the time it is about limiting losses when you are wrong and maximizing profits when you are right.
Only check prices on a time frame that is needed and required for your method, watching ever single tick is not optimal for the vast majority of trading methods.
The big profits are in the multi day and weekly trends not the intra-day range.
It is crucial to understand the difference between what is noise in price movements and what are real signals. Studying historical charts and backtesting will separate the noise from the signal.
The weakest part of any trading method is the trader executing it. There are many ways to make money in the market but they all require discipline and consistency to make any of them work long term.
The traders that manage risk exposure the best are generally the ones that win in the long term.
Only trade liquid markets, stocks, commodities, cryptocurrencies and options. Wide Bid/Ask spreads can make a good system unprofitable.
If you trade in the direction of the trend for your time frame, manage the risk of ruin, and stay disciplined you can make money in the markets, but if one of these are missing it will cost you money to trade, sometimes a lot of money.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
William J. O’Neil’s 10 trading principles that made him a fortune and a legend:
A thread 🧵👇
He sells a stock he is holding after it has gone down 7% from his purchase price.
“I make it a rule to never lose more than 7% on any stock I buy. If a stock drops 7% below my purchase price, I will automatically sell it at the market – no second-guessing, no hesitation”
One of the major keys to his profitable trading was only having small losses when he was wrong.
“The whole secret to winning in the stock market is to lose the least amount possible when you’re not right.”
Things A Trader Needs to Give Up if They Want to Make Money:
A Thread 🧵👇
Give up your need to be right: The market is always right, don’t strive to be right in your predictions and opinions. Strive to go with the flow of the market.
Give up control: No matter how long you watch a live stock stream, you have no power over the movements. Save your emotional energy by not trying to cheer on your positions and get wrapped up in every price tick.
Trading the price action as it plays out has a better odds of putting a trader on the right side of the market than a trader with a bunch of opinions and predictions.
Backtested signals that worked in the past have better odds of success in the future than guessing which way the market will go.