1. You must master three disciplines to achieve long-term successful speculation: a. Trading methodology (long or short-term, technical versus fundamental analysis, type of trading system, etc); b. Psychological discipline (controlling emotions of fear, greed and anxiety); c. Money management (risk reword decision analysis for each trading opportunity - when, where, why and how to bet on a particular event)
All three disciplines are necessary, but not sufficient individually - only all three combined are necessary and sufficient to achieve success.
You must develop a trading personality which integrates all three disciplines to achieve long-term success in speculation. If you do not, you will fail.
2. 95% of traders are totally disorganized as to analyzing their trading results . . . and have no concept of how to organize their profitable and unprofitable trades.
Practical organization of trading results is a primary prerequisite in mastering the money management discipline.
3. Long-term success can only be achieved by playing a game with a positive expectation.
4. The best approach is to play a game where you have a positive expectation and make small bets (playing as the casino).
The worst case is to play a negative expectation game and make large bets . . .
5. Losing significant amounts of capital can be avoided if the trader is making a sincere effort to integrate the 3 disciplines into his/her personality.
6. 95% of traders do not know where they have been, where they are or where they are going in their trading. They operate like a plane in a fog trying to fly with no instruments. They are disorganized, uncertain, anxious, fearful and eventually are forced out of the speculation game. If you emulate this 95% group of individuals, you will wind up equally frustrated and you will eventually fail.
7. You should classify any contemplated trade into one of the following five categories before putting on a position:
a. Entrance into congestion
b. A trade within a congestion
c. A breakout from a congestion area
d. A trend run
e. Trend reversal
[This is an abridged version of the original article found at http://kreslik.com/forums/viewtopic.php?t=1526]