The number one and most important rule of trading is – preserve your capital. Without capital you are unable to trade. As Jesse Livermore said “A trader without money is like a shop owner without inventory”.
Preservation of your trading capital is perhaps the most important goal. Regardless of whether you make bad decisions during any trading period, if you employ capital preservation, you will have a chance to recoup losses and ultimately achieve success. The common-sense rules we suggest that you impose on your trading will enable you to survive all market conditions. If you understand and observe these rules, you will already have an advantage over most traders. That advantage means you should, of course, not only survive but outperform the market.
The single factor that causes most traders to overextend themselves and suffer losses is greed. Greedy traders take unnecessary risks. Typically they will fool themselves that a single indicator is the absolute key to success.
Unfortunately, there is no secret to sure-fire gains in the markets. Most traders have confidence in specific indicators. Many focus on particular markets and hope that this focus, and the quantitative or qualitative data they collect, will prove to be the key to investment success. But markets are dynamic and essentially volatile. In such an environment there are no cast-iron certainties. To help you avoid a roller-coaster ride, we are going to show you how to live to trade another day so that, no matter what changes take place in the market, you can enjoy at least modest and worthwhile success.