The Top 10 Lessons I’ve Learned in 10 Years of Trading

I have been learning about the markets and trading them for nearly two decades now. Trust me, when I see this
written out in text, it makes me realize two things:

1. I am getting old, lol.

2. I have learned A LOT in those 10 years.

In fact, I have learned so much that it can be difficult to even decide where to begin sometimes, when it comes to
helping beginning traders. The industry has changed dramatically since I first started trading. I remember actually
calling in my buy and sell orders to my broker, who does that anymore??!

As I grow older, I feel a deeper and deeper desire to give back and to help younger traders and those who are new to
the game. Trading can be a very deceiving profession and if you do not spend the time to learn from those who have
already been around the ‘block’ a few times, you’re going to waste a lot of time and money.

I sat down at a coffee shop whilst writing this and I had a very long think about the most important lessons I have
learned in 10 years of trading the markets.

In no particular order and all equally important, here is what I decided are the top 10 things I’ve learned on my
trading journey…

1. Be a defensive-minded trader.
The famous quote by Warren Buffet about losing money goes something like:

“Rule #1, Never lose money. Rule #2, never forget rule number one”.

Beginning traders often approach the market from the complete wrong mindset. They are just trying to make money
as fast as possible, when in reality, they should be trying to protect their money as much as possible. You really
cannot operate in both mental states at the same time. You have to pick between the two and if you do not choose to
protect your money as much as possible, you’re probably going to lose it.

• The best offense? A good defense.

You hear this a lot in the sporting world but it also applies to trading: The best offense is a good defense. Here’s
why:

The way you achieve long-term consistent trading success is by being defensive in your approach. That means, you
only trade when the market conditions are right, when all your trading plan criteria has been met. The goal of trading
is not just to “make money”, but also to not lose money you have made! These are two different things that require
extreme mental fortitude.

It is not surprising for a beginning trader to get lucky and hit a few good trades, or even to simply do well for a while
by following their plan (not just lucky). However, it’s after doing well for a while that many, if not most, blow it.
Traders get confident, cocky, arrogant, whatever you want to call it. The point is that winning feels good and it OFTEN
goes to a trader’s head, quickly. All that good, defensive, slow, methodical work that you did to hit those winners
tends to go flying out the window when the sensation of winning floods your brain with feel-good chemicals.
Preservation of trading capital is key to success

Working to preserve your trading capital is essentially how you behave in a defensive manner in the market.

Think about it like this: you want to have as much ‘ammo’ (money) in your ‘gun’ (trading account) as possible when
the easy prey comes along. You do not want to be out there shooting at difficult prey that you aren’t going to catch,
then when an easy subject comes along you only have one bullet left. You want that chamber full of bullets so you
can secure the prey.
In trading, you want to preserve your risk capital for the ‘easy’ trade setups, those high probability price action
signals that are so obvious they are literally speaking to you! You don’t want to waste your money on those ‘on the
fence’ signals that you go digging for confirmation on the internet for. The best signals are super obvious, most of
the time, and that is something I’ve definitely learned over the years.

You will never get upset with yourself (at least you shouldn’t) for taking a strong and confluent trade signal that
fails, as long as you managed your risk properly. But, if you take a signal that you weren’t sure about, that “sort of”
looked like a signal but “not really”, and you lose, you’re going to be kicking yourself.

My goal as a trader is to never feel like I want to kick myself after a trade, win, lose or draw.

2. Watching Charts & Monitoring Trades Will Actually Hurt Your Results
Often, in life, the more we meddle with something the worse it becomes. If you’re in an argument with your significant
other and you continue to bring up that argument and rehash it, is that it going to be better than just dropping it and
moving on? No, of course not. Most of the time, over-involvement is a negative thing and when we are too involved
with our trades, it typically is a very, very bad thing.

How many times have you been in a trade and you kept checking it and you ended up adding to the position, closing
it out too soon or doing something else that you otherwise wouldn’t have, and it ended up back-firing? This is very
common and one of the biggest trading mistakes that causes traders to lose money.

Enter your trades and then stop thinking about them

The easiest way to avoid the pitfall of over-watching and over-thinking about your trades? Set and forget. I know I’ve
said it a lot, but I will say it again because it’s perhaps the most important trading lesson I have ever learned: the less
involved you are with your trades, the better you’re going to do. This is why I have written articles on the set and
forget trading approach and on focusing on daily chart time frames. You see, when you simply follow your trading
plan and let the trades play out, let your trading edge play out uninterrupted, THAT is real skill, that is real discipline
and passion. These traders who are just “running and gunning” instead of trading like a sniper, are not trading with
skill or discipline, they are gambling. They can’t stop trading because they can’t forget about the market.

You have to literally forget about the market for a while when you have a trade on. The most effective way to do this
is to not risk more than you are comfortable with losing. The number one reason traders start watching the charts too
much and meddling with their trades, is that they’ve risked too much money on that trade.

3. The results of your last trade should not affect your next trade.
Another very, very important lesson that traders often do not learn or understand until years into their trading journey
is that the outcome of your last trade has (and should have) zero bearing on your next trade. In other words, you should
never let your last trade influence your next trade.

Every single trade you take is different and unique from the previous one(s). There literally are no two trade signals
that are exactly the same. Even if they look the same, the surrounding market context will be different, so they aren’t
the same. This is important to understand because traders often make assumptions about their next trade based off
their last trade or past trades.

Winners and losers are random

The results of any trading edge / strategy are randomly distributed. What this means is, if you take 100 trades in a year
and you had say 50 wins and 50 losses, the pattern of those wins and losses is totally random. You could have 10
losses in a row followed by 2 winners followed by 10 more losers, then followed by 20 winners. The question is, how
are you going to handle such a random distribution of wins and losses? If you’re anything like most traders, you’re
going to let it affect you very, very negatively. Can you handle 2 losses in a row? 5? How about 10? Most people can’t
and that is why most people fail. It can be very hard to see the forest from the trees as a trader, but you have to if you
want to succeed long-term.

What I mean by “see the forest from the trees” is not letting any single trade result distract you. If you start letting
single trades influence you, you will lose sight of the bigger picture of what you’re supposed to be doing and what it
takes to succeed long-term.

Be extra-careful after a big winner

Traders often become overly-fearful after a losing trade and overly-confident after a winner. Now, whilst neither is
good, I feel it’s riskier to become over-confident. When you get over-confident you end up taking bigger risks in the
market and this can obviously result in bigger losses, kicking off a cascade of emotions and trading mistakes that can
literally wipe your account out in a day’s time. It’s important to take some time off after a trade closes out and calm
down, reflect, breathe. The market will be there tomorrow, so always remembering that. You should never feel like
it’s “urgent” to be in a trade.

4. Doing LESS will actually get you MORE…

Most traders fail simply because they do too much. They do too much research (yes you can do too much research),
too much reading, too much thinking about trading, too much watching the charts, too much trading in general.

It’s important to realize the power of doing nothing as a trader. Many times, if not most of the time, doing nothing is
the most PROFITABLE thing you can do! Here’s why:

Low-frequency trading

Ok, I know this isn’t probably what you want to hear, but since when have I been worried about telling people what
they want to hear and not what they NEED to hear?? Never.

There aren’t that many good trade signals on any given month in the markets. What I mean is, there simply is not a
large amount of high-probability entry signals on any given week or month. Why? Well, because most of the price
action in a market is just random meaningless noise.

Your mission, as a price action analysis trader, is to learn to filter the good trade signals from the bad by learning
how to read the footprint of the market; the price action. Once you master this, you will quickly realize that good
trades that are worth risking your money on are relatively infrequent. But the good part is, you do not need to trade a
lot to make a lot of money in the markets.

Hedge-fund trader’s mindset

A hedge-fund trader, controlling millions or billions in money, is not thinking about trading constantly. Instead, they
are meticulously ‘combing’ through the price data of the markets they trade to find that ‘diamond in the rough’. They
are looking for a high-probability trade that is WORTHY of risking their client’s precious capital on.

You should think like this too. It’s your money on the line, that you worked HARD for. So, do not throw it away on
“so-so” setups that you think are “kinda, maybe” a good setup. Wait for those higher time frame trades on the 4-hour
or daily chart time frame that are so obvious you’d feel stupid for not taking them.

Also, don’t overthink this. Often, traders think themselves right out of perfectly good trade setups. We have a tendency
to start thinking “This trade is too good to be true” and so we settle for lower-probability trades that we feel good
about because we spent 3 hours finding confirming news pieces on the internet that agree with the trade.

I am telling you, from 10 years of live-trading experience, the best trades are almost always the most obvious ones!
5. Know where you’re getting out BEFORE you get in!

When trading the markets, there is no boss, no “authority” figure telling you what to do. Hence, you have to make the
rules. You have to discipline yourself and you have to hold yourself accountable. These are the reasons why most
traders fail. Most people, left to their own devices, simply are not disciplined or self-controlled enough to do these
things.

One mission-critical component of the trading process is determining your trade exit, BEFORE you click that buy or
sell button. This is a huge lesson that took me multiple years early-on, to learn. Don’t let it take you that long!
The exit is MUCH harder than the entry!

The only way you’re going to make money as a trader is to remove yourself from the trade exit process as much as
possible. The exit is where most people screw the whole thing up. I’ve written many articles on trade exits, but one
you should definitely check out is this one on a simple trade exit plan, it will help you see why simple is better with
trade exits.

Most traders exit based on emotion. Doing so, typically results in either a very small win or a large loss. Rarely do
many traders exit when a trade is heavily in their favor. Why? Emotions. When you’re up big all you can think about
are all the “reasons why” that winning position will grow even more. It doesn’t cross your mind that YOU’RE BEING
GREEDY or that the best time to exit is when you’re up BIG. It’s exactly the same mindset of a casino-goer. They
keep pulling that slot machine arm even when they’re up and they know they will probably give that money back.

You have to find a way to force yourself to exit when a trade is in your favor, not when it’s crashing back against you
about to turn into a loser. The only fool-proof way to do this is to have a strict profit-taking plan that you follow
religiously. If you leave the exit up to the moment, you will be left to exiting on your own discretion, which typically
doesn’t end well for most people

6. Be out of the market much more than you’re in.

One of the most important lessons I have learned over my 10+ years of trading the markets, is that trading too much
is a quick way to lose all your money.

Most traders come into the market and as soon as they fund their first live account, they are off to the ‘races’, over-
trading and dealing with the consequences later. It’s a difficult lesson to learn, and most traders don’t actually learn it
until they’ve lost more money than they can stand to think about, but the fact is, if you do not learn to trade with low-
frequency, you’re going to find yourself losing at a high-frequency.

Get comfortable with the daily chart time frame

If you’ve followed me for any length of time, you know that I have written many articles about the power of higher
time frame charts and why you should focus on them. One of the biggest reasons to focus on higher time frames is
that they act as a natural ‘filter’ for all the noise of the market and if you follow your trading plan strictly you will
naturally trade less often just by focusing on them.

The daily chart is really the key to technical analysis in my opinion. Learn to trade the daily chart first and foremost
and center your entire trading strategy around it and you will already be light-years ahead of the masses of traders
out there day trading all their money away.

7. Can you fall asleep and sleep soundly at night?

You will find a million different risk management strategies on the internet, but most of them either don’t work, are
illogical or overly-complicated. In all my years of trading I have found no better way to gauge if I’m risking too much
than the sleep test.
The most important measure of risk for a trader is their per-trade dollar (or whatever currency your account is in) risk.
Meaning, what is your R-number, or your dollars risked per trade? If you don’t know this number, you’re already
failing.

The money management sleep-test

The single best way to test if you’re risking too much money per trade is to determine if you are preoccupied with that
trade. In other words, are you thinking about the trade even when you’re away from your charts? Are you laying in
bed thinking about that money you have risked? Are you waking up at night and sneaking downstairs to check the
charts on your laptop? Or worse, laying in your bed checking on your phone?

If you are doing any or all of the above, you have a serious issue that needs fixed ASAP.

The ONLY way to have a fighting chance at sticking around long enough in the market to hit enough big market
moves to make money, is by making sure you aren’t risking too much money per trade.

If you find you are overly-worried about your trades and you cannot sleep because of it, then back off the risk until
you can easily fall asleep. Reduce your position size on your next trade and keep reducing it until you can confidently
close up your charts and not be worried or overly preoccupied with your trades. Trust me on this, it works and it will
help you avoid many other trading mistakes that are the result of risking too much!

8. Know what the h$%! you’re doing before you start trading real money!

This one may seem obvious, but many traders start trading real money without actually understanding how to use the
platform their using or having a trading strategy. They are, for all practical purposes, gambling. Don’t be like them.
There are a few things you NEED to do before you start trading real money, if you don’t want to lose it all right
away that is.

Master your trading strategy

I feel like this point is so obvious, but for many traders it is something they gloss over. You simply cannot start
trading live without having mastered your trading strategy. Doing so is like trying to fly a commercial airliner
without any training and hoping you don’t crash. Not gonna happen.

I obviously recommend you learn and trading with my price action strategies that I detail in my trading courses, but
more important FOR YOU, is to make sure that whatever strategy you do use, you both commit to it and master is
before going live. Don’t waffle and wander. Don’t try combining a bunch of different trading methods, this doesn’t
work, trust me.

Master your money management

As I said in point 7 above, you have to be able to sleep at night with the money you are risking in the market if you
want to have a chance at long-term success, so first figure out what that dollar amount is for YOU. Don’t stray from
that dollar amount or increase it until you’re seeing consistent success.
Demo trade it first

Both of the two sub-points above, mastering your trading strategy and money management are things you need
to demo trade for 2-4 months before going live. You must learn the mechanics of the platform you’re using before
you start risking real money on it, or else you will lose money just to making stupid mistakes like inputting the wrong
position size, etc.

9. Have you mastered yourself yet? If not, you need to.

If I had to give you just once piece of trading advice, the most important lesson I have learned in 10 years of trading,
it is to master yourself if you want to master the markets.
Until you deal with the mental / emotional weaknesses that you have (we all have some), you will never make
consistent money as a trader. Trading success is much more the result of going on a personal journey and conquering
the pitfalls and ‘enemies’ in your mind, than the trading method you use. Most traders don’t realize this fact until it’s
too late.

Check your ego at the door

Ego-check. Leave it at the door or it will eat you alive in the markets, every time. Being confident is a great quality
in life and for a trader, but there’s a very fine line between being “confident” and being overly-confident, and it’s a
line you cannot afford to cross, literally. Over-confidence sneaks up on even the greatest of traders, leading them to
take a trade they probably shouldn’t have taken or leading them to make other mistakes. Typically, a trader becomes
over-confident after hitting a few good winning trades, they then let this go to their heads and start over-trading
because they feel like they have some secret trading power now. This is very, very dangerous.

Show me a disciplined person and I’ll show you a good trader

What is self-discipline in regards to trading? We talk about its “discipline” a lot, but what does it look like as a trader?
It looks like this: You just exited a very profitable trade, you’re feeling great, feeling wonderful. What you do next
will tell me if you’re disciplined enough to KEEP making money, or not.

A disciplined trader will do nothing out of the ordinary at this point. They will continue with their trading plan. In
fact, they will probably close the computer and come back tomorrow when the euphoric-feeling they got from winning
subsides. You can and should build things like this into your trading plan. For example, you have a section called
“What to do after a winning trade” where you detail how you will leave the market along for 24-48 hours after a
winner,

An undisciplined trader, upon closing out a nice winner, will immediately jump back into the market, or jump back
into a trade that same day. This is almost always a mistake. RARELY is there going to be a high-probability trade
signal waiting for you right after you just exited a big winning trade. Trust me.

10. Confluence is King

As far as your actual trade entries go, the most important lesson I’ve learned over my 10+ years in the market is that
the more confluence a trade has, the better. Confluence in trading means multiple supporting factors intersecting or
lining up in support of a trade.

Typically, on the charts this looks like a clear signal combined with a key chart level in the context of a trending
market. I call this the T.L.S. method or Trend, Level, Signal. Ideally, you’ll have all 3 lining up, but you can get away
with just 2 of the 3.

If you want a trade entry “system”, here it is:

Many traders want mechanical trading systems with strict rules to follow, to eliminate the potential for human error.
Whilst I am generally not a proponent of mechanical / rigid trading systems like robot trading, the T.L.S. method can
be a form of mechanical trading for a price action trader.

You simply write into your trading plan that any trade you take MUST have the trend, level and signal in agreement,
or you don’t enter it. These types of things are good for beginning traders, to build confidence and discipline. I
recommend you try this if you’re new or struggling.

Conclusion
As you can see, I could write an entire library on all the things I have learned from my 10+ years trading the markets.
However, everything must come to an end, so I am going to wrap up today’s lesson with the following insight I’ve
learned from my time “in the trenches”:
The best traders are humble and open-minded. They know they could lose on any trade and they trade accordingly.
Traders start losing and doing poorly when they start believing they know something “for sure” in the market and (or)
they start getting careless and undisciplined.

Trading the markets is truly a double-edged sword in that it can be the best way to make money; don’t have to drive
anywhere, no boss, unlimited profit potential, very low barrier to entry and low ongoing costs. Or, it can be the fastest
way to lose money IF YOU let it be. Always remember, you are in control of yourself and THAT is your real power
in the market and the only chance you have at beating your opponents at this game. Self-control is something that you
will either learn from mentors or that you’ll learn the hard, expensive way. Given enough time, the market will
eventually teach you every lesson you need to know but you’ve got to ask yourself, do you have enough money and
mental fortitude to stick around long enough to learn the hard way?