Proper money management is essential for successful trading.
A disciplined trader cuts his losses short and outperforms a loser who keeps hanging on and hoping.
As soon as you buy, place a stop-loss order.
Greed and fear destroy traders by clouding their minds. The only way to succeed in trading is to use your intellect.
The goal of a successful trader is to make the best trades. Money is secondary. If this surprises you, think how good professionals in any field operate. Good teachers, doctors, lawyers, farmers and others make money – but they do not count it while they work. If they do, the quality of their work suffers.
Serious traders place stops the moment they enter a trade.
We all like to hope that a trade will succeed – and a stop is a piece of reality that prevents traders from hanging on to empty hope.
Learning to place stops is like learning to drive defensively.
A stop is not a perfect tool but it is the best defensive tool
Taking advantage of potential major winning trades is not only important to the mental health of the trader but is also critical to winning. Letting winners ride is every bit as important as cutting losses short. If you don’t stay with your winners, you are not going to be able to pay for the losers.
In addition to not overtrading, it is important to commit to an exit point on every trade. Protective stops are very important because they force this commitment on the trader.
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