Method, Physce & Risk Management.

Traders who want to make money need to have the right mindset, good money management, and a winning trading method. It is crucial to have all three elements, because missing even one of them can lead to blowing up your account. This rule applies to both professional and amateur traders. To succeed in trading, it is important to follow universal principles that have been proven over time. Some professionals have ignored these laws of trading and destroyed capital in hedge funds and even entire banks.

To be successful in trading, you need to have a winning system. This means only trading tested systems with a positive expectancy in the long term. Your trading system also needs to align with your beliefs about the market, so you have faith in it. Risk and reward are also important factors to consider. Never trade unless your profit expectations are greater than your capital at risk.

Trader psychology is another key factor to consider. You need to have discipline and keep trading your method even when it doesn't work for a given time period. It's important to admit when you are wrong and not let your ego get in the way. Trading math, not emotions, is the way to succeed.

Risk management is also essential. Never risk more than 1% of your total account capital on any one trade to avoid the risk of ruin. Position sizing is another important factor. You need to use your capital at risk to understand the right amount to trade based on the security's volatility. It's also important to never put more than 6% of your total capital at risk at any given time on all positions. Always have an exit strategy to lock in your winners using trailing stops.

In summary, traders who want to make money need to have a winning system, faith in their trading beliefs, proper risk and reward, discipline, and the ability to manage their emotions. Risk management is also crucial, with position sizing and trailing stops being key components. By following these universal principles, you can increase your chances of success in trading.

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