Core Trading Foundations

1. Risk Management

• Predefine your stop before entering a trade — “Hope isn’t a strategy.”
• Never move your stop to avoid pain. Treat losses as tuition and move on.
• Never revenge trade. Losing a trade isn’t a reason to risk more.
• Break-even trades turn potential losses into neutral outcomes; just don’t do it too early or you’ll cut profits short.
• Cut losers fast — once your idea is invalid, exit immediately.
• Risk based on account size, not ego size. Overleveraging destroys accounts faster than bad setups.
• Consistency matters: Risk 0.5–2% per trade. You can’t control the market, but you can control your exposure.

2. Exits

• Exiting trades requires logic and structure — not emotion.
• Static exits: Fixed risk-to-reward ratios (RR), predefined targets (like VWAP), or single “get in / get out” setups.
• Dynamic exits: Trailing stops, partial scaling, volatility-based exits, or time-based exits.
• Goal: Protect profits without strangling potential.
• Funded accounts: Favor fixed RR + one partial.
• Personal accounts: Trail stops, leave runners, and use break-even management.

3. Psychology

• Trading success = edge + risk management + psychology.
• Main psychological traps:
  • FOMO: Missing trades costs nothing; forcing trades costs everything.
  • Loss Aversion: Reduce size until fear disappears.
  • Overtrading: Usually caused by boredom or revenge trading; fix it by defining A+ setups.
  • Euphoria: After big wins, pride leads to recklessness.
  • Attachment to trade ideas: Don’t tie your identity to one setup; aim to trade well, not be right.