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The 7 Fundamental Truths of Trading
Welcome to this week’s newsletter. Today I will write about the 7 fundamental truths every trader needs to follow for trading success. They are based on the book “Trading in The Zone” by Mark Douglas. I highly recommend every single one of you read that book if you haven’t already.
1. Anything Can Happen
In trading, uncertainty is the only certainty. Traders should approach each trade understanding that the market is unpredictable, and anything can happen at any time.
Develop a trading mindset that is devoid of expectations. Rely on your trading plan and strategies and avoid being swayed by emotions. This acceptance of uncertainty provides mental clarity, allowing for better decision-making during trades.
2. You Don’t Need to Know What Is Going to Happen Next to Make Money
Predicting the future of the market isn’t required for success; instead, focus on strategies that manage risk and reward effectively.
Implement robust risk management protocols. Concentrate on the consistent application of your trading strategy, recognizing that while individual trades are unpredictable, a well-formed strategy can be profitable over time.
3. There Is a Random Distribution Between Wins and Losses
Within any series of trades, wins and losses occur sporadically and inconsistently, reinforcing the necessity for a rational, not emotional, approach.
Establish a consistent trading approach, treating each trade as a singular event with its own set of probabilities, detached from the outcomes of previous trades. Overemphasis on patterns of wins and losses can lead to overconfidence or fear.
4. An Edge is Nothing More Than an Indication of a Higher Probability of One Thing Happening Over Another
Having an “edge” is about probabilities, not certainties. It offers a statistical advantage but not a guarantee.
Understand and accept that every trade, even with an edge, carries the risk of loss. Focus on maintaining your edge through continuous learning and adapting, and apply it consistently over numerous trades to realize its benefits.
5. Every Moment in the Market is Unique
The market is fluid, and ever-changing due to countless variables, making every moment singular and every opportunity different.
Cultivate flexibility in your trading approach, adapting strategies to align with the current market conditions and continuously reassessing market environments. Avoid rigid strategies and remain open to learning from each unique market moment.
6. The Market is Never Wrong
The market’s price and movements are the absolute reflections of all known information and collective market participant perceptions.
Respect the market’s movements and adapt your strategies accordingly. Fighting against the market leads to losses; hence aligning with market flow and learning from it is key to trading success.
7. It’s Virtually Impossible to Learn How to Not Lose
Losses are inevitable and integral components of trading. Attempting to eliminate losses is futile and counterproductive.
Embrace losses as learning experiences and components of your overall trading strategy. Manage losses through effective risk management and view them in context with your overall trading performance and growth.
Live Scalping Sessions are Back!
Get ready for some live trading action this Wednesday the 27th at 09:00 UTC+2!
I will go through my scalping system while looking for trades live. You don’t want to miss this one!
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