Reblog: The Rare Trading Edge

Being a profitable trader is not just about changing what you do but who you are. Unprofitable traders tend to be impulsive, greedy, impatient, and take actions that are random. You don’t need to do one great trade, the odds are that one big trade will cause more damage than good. Like most lottery winners that end up bankrupt most new traders with windfalls from luck give all the money back when the risk of trading too big catches up with them in big losses. The skills a new trader needs to learn is creating good trading signals, proper position sizing, the discipline to follow their plan and the flexibility to go with the price action.

The magic happens after consistently following a quantified trading system day after day and month after month and let profits play out. The sustainable money in trading is learning how to minimise losses, exit winning trades while the money is still there and the compounding of capital over time. The magic happens with the creation of a system that fits your own beliefs and risk tolerance and the repeating of your entries and exits over time.

There are many profitable systems that can make you money, if it was a matter of an idea or a backtest everyone would be rich. It is the execution of the right idea over time with discipline and self control that makes all the difference. The rare trading edge is the trader’s mastery of their own mind and emotions.