To offer only positive or negative responses to common trading maxims without devoting my own personal convictions would be unfair.
My own personal trading beliefs reflect the flexibility that I feel has contributed to my success in over 24 years of trading. And although on the surface they appear to be quite simple, they are principles that nonetheless have stood the test of time over two decades of changing markets. The difficulty is not in their concept, but in the discipline required to implement them properly:
1. START SLOWLY
Why do beginners rush in where experts fear to trade? Maybe it’s because novices don’t know the dangers awaiting the unwary. There’s absolutely no rush. The markets will be there tomorrow. Just be sure you are there to trade them and in the proper frame of mind.
The rewards of successful trading do not come easily. There’s a price you must pay. There are skills you must develop. That’s why you must be patient and allow yourself some time.
2. LEARN FROM YOUR MISTAKES
You must never have a losing trade and fail to ask yourself why. Maybe you were wrong in your assessment of the market. That would be easy to correct. But suppose you were right in your judgment of the market and still lost money? Was your timing wrong? Did you over trade? Did other information change your opinion? Was your management of your account wrong? Did another position in your account force you to liquidate? These and other questions must be asked and answered if you are to learn and if you are to ever turn your trading account into a profitable venture.
Never make a mistake without asking yourself why.
3. UNDERSTAND THAT KNOWLEDGE IS THE KEY TO SUCCESS
To trade contracts in the soybean complex, you don’t have to be an expert on the soybean plant. But you should know where it is grown worldwide, crop size, export outlook, supply and demand factors, government loan programs, etc. similarly, you don’t need to be an economist to trade in the financial markets. But again, you must be aware of all government reports, when they are due, and what is expected. The exchange where a commodity is traded will be pleased to send you all you need to get started.
There is no book you can read that will teach you how to trade successfully. I certainly cannot teach you how to trade. But you must know what is going on in the marketplace. Knowledge is one of the key ingredients to success in this field. And the more knowledge you acquire, I believe, the more you reduce the risk in trading.
4. LEARN TO LOOK AT ALL SIDES OF THE MARKET
One of the best traders I know refers to it as thinking in 180 degrees. If you are bullish and trading from the long side, don’t ignore bearish thinking. Being aware of the bullish thoughts as well as the bearish ones will allow you to become more flexible and a much better trader.
There is success to be found in both bullish and bearish views of the market. I believe that the trader who becomes active in both bullish and bearish positions has more fun and finds more opportunities for success.
