52 Hard-Earned Lessons on Trading Philosophy from Mindset to Strategy You Must Know
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52 Hard-Earned Lessons on Trading Philosophy from Mindset to Strategy You Must Know
The market doesn't care about your beliefs—either stop loss, or get rekt.
Navigating Web3 tides with focused insightsAuthor: kel xyz
Translation: Tim, PANews
Trading is lonely, painful, and a practice filled with constant self-doubt. Drawing from reading books, learning from sharp traders, and countless trials and errors in the market, the author summarizes 52 "trading taboos" spanning mindset to strategy—revealing that the core of trading success lies in discipline, patience, and risk management.
1) Never over-invest. When you start losing rationality, even a correct judgment can lead to ruin through overexposure. Blowing up your account via over-investment remains the fastest path to bankruptcy.
2) Never trade when exhausted or sleep-deprived. Decision fatigue will end your trading career faster than any forced liquidation.
3) Never trade without a clear edge. Entering without an advantage is just unnecessary gambling. If you can't explain your edge in one sentence, you probably don't have one.
4) Never open positions out of boredom. Frequent trading leads to poor returns. Often, staying on the sidelines is the best move. If you find yourself forcing trades simply because you “don’t want to sit idle” or “haven’t traded in a while,” pause and reflect. Trading for the sake of trading leads to reckless decisions and losses. The market doesn’t reward those who trade the most—it rewards those who profit the most. Sometimes, not trading is the best trade.
5) Never continue trading after a major loss. Emotions run high, and you may try to recover losses with an irrational bet. This desperate desire to “get back” ensures you’ll lose even more.
6) Never enter a trade without a clear exit plan. Whether time-based stop-losses, price stops, invalidation conditions, or catalyst-driven exits—your exit must be defined before entry. Remember: the last moment you can remain objective is before placing the order. Once you’re in a position, admitting error becomes extremely difficult. Always set your stop-loss and exit conditions in advance.
7) Never stubbornly cling to a losing position. The market doesn’t care about your conviction. Either cut it, or get cut.
8) Never trade based on P&L; trade based on the market itself. Urgency to recover losses or fixation on past profits clouds judgment and disrupts execution.
9) Not every idea deserves to become a trade. Often, the best trade is no trade. Preserving capital and energy until favorable conditions arise is far more important than forcing action.
10) Never fight the trend. The tide is stronger than you are. Adapt, or be eliminated.
11) Never try to catch a falling knife. “Cheap” can always get cheaper.
12) Never violate your rules or deviate from your plan when emotional. Your rules exist for a reason—usually born from painful lessons. The moment you convince yourself “just this once” to ignore a rule (e.g., moving your stop-loss, doubling down, or sizing too large), chaos begins. Discipline means doing the right thing even when it’s hard. As a classic trading adage goes: “Plan your trade, and trade your plan.”
13) Never go all-in at once.
14) Never trade when you feel uneasy. If your position size causes anxiety, you’ll spiral into panic-driven decisions, imagining the market or some force is trying to squeeze you out. A truly smart approach: let peaceful sleep be the natural measure of proper position sizing.
15) Never let pride trap you in a bad trade. Acknowledge mistakes: cut losses, adjust, and move forward.
16) Never underestimate reflexivity in markets. Strong assets keep making new highs; weak ones keep making new lows.
17) Never assume liquidity will appear when you need it. Exit routes are narrower than you think. Liquidity isn’t under your control—it’s determined by the market.
18) Never mistake random market noise for a strategy. Buying solely because price rose, or shorting just because something “feels expensive,” isn’t real trading—it’s blind gambling. Even with solid risk controls, if your entry lacks fundamental justification, you’ll bleed out slowly.
19) Never make the same mistake twice. Mistakes are inevitable, but repeating them isn’t acceptable. Never lose money the same way twice.
20) Never forget defense. Making mistakes is okay; persisting in them isn’t. Protecting principal is paramount. Don’t just focus on making money—focus on preserving what you already have.
21) Never focus only on offense. Survival comes first. You can’t win if you don’t place bets. But if you lose all your chips, you can’t bet anymore.
22) After a big win, never fall into the lifestyle inflation trap. Problems begin when you start projecting annual income based on one lucky trade.
23) Never forget to switch to a defensive stance after a winning streak. Massive losses often follow strings of success, when overconfidence sets in. Stay humble—your last big trade means nothing to the market.
24) Never let pride or arrogance take over. Stay humble.
25) Never trade when you lack control—for example, during FOMC meetings.
26) Never become complacent. A strategy that works in one market environment may fail in another. Trading is a craft requiring constant refinement. Comfort zones are enemies of profitability. Never assume you can predict market direction.
"There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know." Never believe your edge is permanent. Markets evolve, edges decay. What worked last cycle may fail entirely in the next. Keep iterating strategies, continuously test and re-evaluate. Standing still equals self-destruction.
27) Never average down on a losing position after your original thesis is invalidated.
28) Don’t trade with certainty—trade with conviction.
29) Never assume the market “must” behave a certain way, especially based on recent patterns. The market has no obligation to continue trends or follow logic. Even if prices keep rising (or falling), a sudden reversal can occur. Avoid absolute language like “definitely” or “impossible” in trading. Keep your mind flexible—anything is possible. Remember: never say “never” about market behavior.
30) Never treat win rate as everything. Chasing high win rates for ego satisfaction is a trap. Taking profits too early or avoiding necessary small losses ultimately harms profitability.
31) Never underestimate the importance of discipline, patience, risk management, and execution—these matter more than chasing alpha alone. Many traders possess strong alpha ideas but lack the ability to execute properly. Good execution isn’t just picking trades and strategies—it’s knowing when to do nothing. When conditions aren’t favorable, the best execution decision is often inaction. Always ask: “Do I actually have an edge here, or am I just flipping a coin?” If the latter, preserve strength and wait for better opportunities.
32) After heavy losses, don’t give up; after big wins, don’t get carried away. Emotional resilience is a trader’s greatest asset.
33) Never ignore price action following news releases. If the market reacts opposite to your expectation, exit immediately. The market is signaling information you haven’t yet perceived.
34) Never trade on borrowed conviction. If you bought based on someone else’s advice, you’ll need them to tell you when to exit—and when they stay silent, you’re stuck. As Livermore said: “Nobody can make big money off what someone else tells them.” Hone your own skills, build your own system. If you can’t trust your own decisions, you’re merely a pawn in someone else’s game.
35) Never ignore your gut feeling. If something feels wrong, it usually is.
36) Never try to catch every single market move.
People are easily tempted to chase every fluctuation, but this approach is futile. Approach the market with abundance, not scarcity. It will always be there, offering ample opportunities to reach your goals. You don’t need to swing at every pitch like a batter.
37) Never underestimate the power of failure. As long as you persist, failing early and often allows continuous improvement.
38) When your investment rationale collapses, never hold onto a losing position—especially after a steep drop. The thought “I’ve already lost so much, I can’t sell now” will leave you with nothing.
39) Never let “break-even thinking” dominate your decisions. This mindset leads to overtrading and eventual total wipeout.
40) Never focus only on entry timing. A trade isn’t complete until you’ve exited. Knowing when to take profits is just as crucial as knowing when to enter.
41) Never overlook the seemingly “boring” parts (position sizing, stop-loss setup, risk-reward ratio)—they are the foundation of your survival in the market. Don’t wait for a catastrophic loss to learn this lesson.
42) Don’t trade for excitement—aim for consistent, steady gains.
43) Never fall for the illusion of control—it’s often just a lagging perception of reality.
44) Never stay in a trade due to “hope” or wishful thinking.
45) Never underestimate the importance of risk management. Always prioritize capital preservation over profit chasing. Manage your losses, and profits will follow.
46) Never enter or exit rashly. Just as you scale into positions, you should also scale out. Going “all-in, all-out” is tantamount to self-destruction.
47) Never make bets you can’t afford to lose. No single trade should be large enough to force you out of the game. The most critical rule: never let losses spiral out of control. Even after 20 or 30 consecutive mistakes, you should still retain capital. Never let one position endanger your entire trading career.
48) Never trade outside your circle of competence. Without an edge, choose to wait. Forcing trades beyond your system only erodes your account over time.
49) Never assume your edge is permanent. Markets evolve, edges fade. Strategies effective in one cycle may become useless in the next. Continuously improve, continuously test. Stagnation equals self-destruction.
50) Never judge a trade solely by its outcome. Good trades can lose; bad trades can win. Focus on execution, not results.
51) Never hold a position just to avoid looking foolish or worrying about public perception. I’ve seen too many people destroy their futures fearing public embarrassment. Cutting losses decisively is the path to survival. The market doesn’t care about your pride—learn to let go of ego.
52) Never underestimate the power of stepping away temporarily. When caught in a losing streak, clear your positions and take a break. Psychological capital is as vital as financial capital—breaking the cycle of negative emotions is key. When returning, start small and low-profile. Rebuild confidence gradually before scaling up again.
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