15 Trading Paradoxes

In over a dozen years of learning what works and what doesn’t in profitable trading I believe there are many paradoxes. Most of trading is counter intuitive and new traders usually enter the market looking for predictions, sure things, hot tips, and to know what to buy. In reality it is following price action as it unfolds, managing risk, trading a plan, and knowing when to sell a wining trade is what really makes the money. Most new traders never become profitable traders because they can never make that leap. Trading is a business and when the new trader becomes a business person and quits wanting to win the trading lottery, that is when the real progress begins.

par·a·dox-

• A seemingly contradictory statement that may nonetheless be true.

• One exhibiting inexplicable or contradictory aspects.

• A statement contrary to received opinion.

Here are ten paradoxes that I have learned on my own path to consistent profitable trading.

1. The less I trade the more money I make.

2. All my biggest profits were made on option contracts I bought not ones I sold.

3. My number one job as a trader is to manage risks not make money.

4. The best traders in history were the best risk managers not the best at entries and exits.

5. The ability to admit you are wrong about a trade and get out is more important than being confident in a wining trade and staying in no matter what.

6. Winning traders think like a casino losing traders think like gamblers.

7. Opinions, projections, and predictions are worthless, trade the price action.

8. At times fundamentals are good helpers to a trader but they are always terrible masters.

9. Only date trading vehicles but marry your risk management and positive mind set.

10. The smaller and more focused my watch list the better I trade what is on my watch list.

11. You can go broke taking profits if your profits are small and your losses are big.

12. Be very cautious of a small loss becoming a big loss but be open-minded to a nice profit becoming a huge profit.

13. Being flexible about your market outlook is more important to profitability than committed to your directional view.

14. I made my trading profits by reacting to price action and following along with the trend not predicting price action and wanting to prove I was right.

15. Your risk management and mindset will determine your trading success more than your entries and exits will.