20 + Trading Glaring Truths No One Will Ever Tell You
Nope! I’m not skeptical…
But read that again ….. These are Trading Truths No One Will Ever Tell You. Abiding by them, you’ll forever change the way you approach markets for good.
In my journey in pursuit of professional trading, I come across guys with words no one will tell you for free.
If you are a beginner, anywhere in between, or an expert, the following words will forever change the way you trade.
Disclaimer: Most of the professional information here is from DailyFx.com, with which I’ve no affiliation in any way. But honestly, I appreciate the knowledge they share.
Go ahead and relish the truths; ignore the numbering. It’s all for information purposes. The professionals and their notes (plus my tips)are not in any order of merit.
After each note, I’ll briefly share how helpful each is in the form of a tip.
Professionals to Follow and What they SAY:
Daniel McCarthy — Strategist
“Plan the trade, then trade the plan. Always.”
Tip: In better words, trading a plan means covering your back. How will you exit if things turn against you? So, always have that exit plan. And again — Always.
Ilya Spivak -Head Strategist, APAC
“I come back time and again to this simple observation by Yra Harris: ‘If you’re right at the wrong time, you’re wrong.’ Its diligent application as a lens through which to view all market analysis and trading decisions has been a bedrock of my strategy for avoiding the common pitfalls that make profitability elusive for investors.”
Tip: Ilya comes out clearly- trading with a strategy that increases the chances of wins through diligent market analysis.
Christopher Vecchio, CFA Senior Strategist
“Trading is about taking decisive action, but you need to be divorced from your emotions. Getting married to a position in the market is a result of many cognitive biases interfering with a sound trading and investment strategy. It’s important to remain objective and be willing to admit defeat as soon as the evidence accumulates against your favor. It’s better to take a small loss and admit you were wrong than take a big loss because you insisted that you were right.”
Tip: In the form of further emphasis, trading is not betting. It’s a calculated entry and exit. Arguably, accepting small loss plus acceptance of being in the wrong is the best way to go about it. And best if you protect your capital, the markets have limitless opportunities to help you recover and most probably compound your account balances.
Michael Boutros — Strategist
“There’s no Holy Grail in trading- it takes strategy, good risk management, and most importantly, discipline. Respect the Technicals- It’s all about the setup. Know what you’re trying to do, in what time frame, and why. Always trade what you see, not what you hear, and stay focused on the levels. Remember, the price never lies.”
Tip: Sure, even if everything holds, the price remains the ultimate factor. Trading on hearsay, of course, amounts to the most irrational joke ever!
Paul Robinson — Strategist
“You could have the most insightful analysis and robust trading strategies, but if your mind isn’t ‘right,’ then none of it will matter. With time I learned the importance of spending a significant portion of my time on the mental game and less on the ‘fun stuff, like analyzing data and charts.”
Tip: Paul is emphatic on the preparations to trade, and most importantly, the management of emotions- but definitely as a buildup on top of analysis.
Martin Essex, MSTA
“Be sure to look carefully at the economic data, political events, the technical picture, and sentiment.”
Tip: And I truthfully concur here. Trading? You balance the four pillars Martin mentions above. Plus, of course, with correct risk management and timing of the entry-exit scenarios.
James Stanley -Senior Strategist
“If you don’t manage your risk, it will manage you. Without a good defense, your offense doesn’t matter. And — hope is a terrible trading strategy.”
Tip: Amidst some of my trades going south, I still recall James Stanley…many times. He conquers me with the truth of his trading Gospel. Traders? More than honestly enough, hope is the most terrible trading strategy.
Of course, traders who do not manage risks go down the usual way… blowing accounts and ending up doing taxi errands.
Peter Hanks — Strategist
“Adhering to a strategy is one of the most important aspects of trading. Trade ideas come and go but tailoring and mastering a strategy over time is one of the factors that can separate a successful trader from a lottery player.”
Tip: Winner FX traders do not do it by magic or spells. It’s honestly following a winning strategy. The importance here is to have one, and best if you reduce it into a checklist; you can tick things to verify.
On last but important point- your strategy sets you apart as a professional winner-trader; you are not a lottery doing trials and error!
David Song — Strategist
“Trading is like running a business. It requires rules and risk management along with the ability to adapt to changing market conditions.”
Tip: What I pick from David is adaptability. Your strategy is not cast on stone. So if things change, you too have to tweak the strategy accordingly.
Daniel Dubrovsky –Strategist
“A key lesson I developed as a trader is learning to lose gracefully. I always start with proper risk management and exit scenarios before assessing my targets. This helps suppress emotion from one’s strategy when the market inevitably begins moving against you. In the long run, this means winning trades compensate for losing ones and is an important step towards being able to generate returns.”
Tip: Losinga trade gracefully equals proper risk management, where you take a small loss and swallow a bitter truth that you are wrong! Small lots do not give you the emotional turmoil like ten times or whatever large lot size is applicable in your case.
Justin McQueen -Strategist
“Markets can remain irrational longer than you can remain solvent.”
Tip: So it’s up to you as a trader to out-survive the irrationality and remain solvent. And here’s where stops come into play. Exit bad trades as early as possible, and exit good trades with as much profit as possible.
Rich Dvorak -Strategist
“A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. Then, all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.” — Charlie Munger.”
Tip: I construe the searching and waiting here as in-depth analysis before market entry- in an excellent model that rinses and repeats appropriately.
Nick Cawley –Strategist
“You cannot change any market you trade, but you can change the way you trade that market. Trading psychology and discipline are as important, if not more so, than fundamental and technical analysis and can help you ‘move the dial’ in your favor to become a better, more profitable, long-term trader.”
Tip: This remains truer every day I trade; changing the way I trade is doing the analysis and risk management correctly.
Daniela Sabin Hathorn -Strategist
“Always remember the basics, especially the first rule of trading: never invest more than what you are willing to lose. Once that is clear, create and follow a trading plan, and learn from your mistakes.”
Tip: Learning from mistakes is painful, and I guess the awful-tasting medicine here is creating and following the trading plan.
Richard Snow –Analyst
“Sometimes, the best trade is no trade at all. A rushed trade without proper analysis and execution is a recipe for disaster.”
Tip: Plain simple if your trading plan sees Nos all through. Traders? Please rest and protect your capital. You can always live to trade another day. Right?
Warren Venketas -Strategist
“Do not trade for the sake of trading. Regardless of trading style, traders must conduct in-depth analysis and research with proper risk management technique before entering into a trade.”
Tip: Guys, never allow this to escape your mind- profitable trading builds on fool proof capital protection.
Tammy Da Costa -Analyst
“There is a fine line between confidence and arrogance, and in trading, it is essential to know when that line is being crossed. Regardless of the amount of trading experience, one has, risk management is always crucial to any trading strategy.”
Tip: If confidence and arrogance cannot help grow your account, you have the wrong strategy, period.
Thomas Westwater- Analyst
“Embrace the challenge that comes with trading the markets and be patient as you develop your sense and ability to trade.”
Tip: Thriving through, you need to cut through all the complexities and build fool proof mechanisms for each challenge or curveball the markets throw into your way.
Margaret Yang, CFA-Strategist
“The market has consistently proven that anybody can be wrong, as it evolves and changes all the time. A good trader needs to adapt to the changes and keep learning. Proper risk management, asset allocation, timing, and practicing will pave the way to success.”
Tip: Everything said and done, traders need to keep changing as the markets do. Stay atop the learning mode while keeping tabs on everything else.
Daniel Moss — Analyst
“The short and sweet strategy proclaimed by Ed Seykota in an interview with Jack Schwager for the seminal book Market Wizards: “Cut losses. Ride winners. Keep bets small. Follow the rules without question. Know when to break the rules.”
Tip: Well, keeping bets small means low risking. And following rules/ a strategy without question is almost doing it robotically. But I like the open-end here-Knowing when to break away from the rules! More or less, it’s the keeping up with changing elements and adaptability to market changes over time.
John Kicklighter -Chief Strategist
“We spend so much time focusing on our ‘edge’, and eventually, we move on to work in risk and positioning management. Over so many years, though, I find that the most important progress I’ve made was through working on my own behavior or psychology. A sound analysis to establish probabilities is straightforward, but our perspective and interpretations are rarely so clear cut.”
Tip: How do you handle your emotions? Two significant ingredients here: Patience and perseverance will take you farthest. Their antonyms will halt your career.
Diego Colman -Market Analyst
“In many aspects of life, you stand to gain more when you focus on the process rather than the results. The same is true in trading. Take one step at a time, as you don’t climb a mountain simply by looking at the top. Every trading system will have losses, but the important thing is to learn from mistakes so that over time your winning trades begin to surpass your losing ones consistently.”
Tips: Greed makes us focus on the highest or unrealistic profit expectations. It’s cutting the greed and working your way through a strategy that wins more than loses -the ultimate grail.
Warren Venketas –Analyst
“Do not trade for the sake of trading. Regardless of trading style, traders must conduct in-depth analysis and research with proper risk management techniques before entering into a trade.”
Tips: I repeat, trading is not just opening and closing trades
Reyner Teo — Distinguished Trader Mentor
Reynor was the first trader whom I read and was like, Yes, I can. And from his resources, you can learn to read and master the reading of Candlesticks. But the best point I pick from him is — Trade Small LOTS. And if you follow that commandment, you’ll be trading Forex Business for as long as you wish.
Also, Reynor comes up with the concept of OPM- other people’s money in trading as a model of upscaling the capital you hold. However, accessing significant capital bases is not an excuse for reckless or risk-free trading!
First off, you must master money and risk management before exploring OPM to scale your FX business.
Andres Pedraza — Distinguished Trader Mentor
Picking from a series of books from Andres, learning to manage your emotions is a huge factor in making a profitable trader. And coincidentally, you master that via proper and adequate market analysis as part of your overall trading strategy.
From Andres, I learned how black swans ravage traders and, surprisingly, even brokers. But he has a fire-proof formula to survive all that.
Tying Everything Together
You’ve got the message.
Trading is simple, do not complicate it with your overboard expectations for super-profits.
In case you skipped everything to read my takeaway, welcome!
The Trading Glaring Truths No One Will Ever Tell You are:
Have a good strategy in place.
You can never change markets, but honestly, you can in the way you trade.
Study your markets hard (analysis) enough to know where to enter and exit. While entering markets, have enough capital and keep lots low. If things do not work out, stops ensure your capital is preserved for another opportunity to trade.
The overall margin of winning more than you lose builds your account upwards.
To grasp everything best, do not skip everything above. And you’ll thank me later.