• Successful traders know that someone else’s errors in judgment are opportunities, and good traders understand how those errors manifest themselves in market price action. Stocks & Bulls’ Team knows this.

• Price movement is a function of the collective perception of buyers and sellers in a market. One side or the other will win the battle of psychological warfare, and as the exhausted side gives up, the price will move up or down. 

• It’s not about the system; it’s about the trader’s ability to execute the trading system.

• The difference between the best and the worst performing trader comes down to their individual psychological makeup. 

• The difficulty in trading lies not in the concepts but in the application. It is relatively easy to learn what to do when trading. It is very difficult to apply those lessons in actual trading.

• Have a positive expectation about the trading system. It’s that confidence that will make traders long-term winners. Believe in the effects of trading with positive expectation. View losses in the same manner: they are the cost of doing business rather than an indication of a trading error or a bad decision. To approach losses this way, we had to know that the method by which the losses were incurred would pay out over the long run. Believe in the long-term success of trading with positive expectation. 

• Some of the trader’s background will enable what other traders won’t be able to do: follow the simple rules.

• Winning traders make money by exploiting the consistently irrational behaviour patterns of other traders. Academic researchers have uncovered a surprisingly large amount of evidence demonstrating that most individuals do not act rationally. 

• Research has suggested that losses can have as much as twice the psychological power of gains. In terms of trading; loss aversion affects one’s ability to follow mechanical trading systems because the losses incurred in following a system are felt more strongly than are the potential winnings from using that system. People feel the pain of losing much more strongly when they follow rules than they do when they incur the same losses from a missed opportunity or by ignoring the rules of the system.

• The tendency to lock in winning trades stems from the desire to avoid losing the winnings. For traders who exhibit this tendency, it becomes very difficult to make up for large losses when winning trades are prematurely cut short of their potential. 

• Good traders don’t try to predict what the market will do; instead they look at the indications of what the market is doing.

• If you bet too big and lose too many times in a row, you could lose all your money and forfeit the ability to keep playing. 

• Outcome bias: the tendency to judge a decision on the basis of its outcome rather than on the quality of that decision at the time it was made. Explicitly avoid outcome bias to ignore the individual outcomes of particular trades and focus on expectations instead.

• Periods of losses usually precede periods of good trading. This knowledge is critical to a trader’s potential success and their ability to keep trading according to a specific set of rules through periods of losing trades. 

• The secret of trading is that you can trade successfully by using ideas and concepts that are well known and have been around for years. But you have to follow those rules consistently. You must be consistent to trade well. You must be able to execute your plan or the plan has no meaning.

• Winning traders think in the present and avoid thinking too much about the future. Beginners want to predict the future in their trading. Winning traders don’t care about being right; they care about making money. 

• Trading with an edge is what separates the professionals from the amateurs. Ignore this and you will be eaten by those who don’t.

• Traders make money only when they are in the market. 

• It has been found that a system that consistently delivers good returns will be more likely to offer good returns in any future period. Therefore, the risk of having that system deliver subpar returns in any given single year will be lower than for a system that had more erratic historical returns.

• One of the ways great traders distinguish themselves from average traders is by their ability to adhere to methods. 

• The graph on the home page showing “Losing & Winning Trades since Inception” gives a pretty good indication of the relative pain versus reward one can expect.

• Good money management helps ensure that you will continue to be able to trade through the inevitable bad periods that every trader experiences. 

• Trading with too much risk is probably the single most common reason for failure among new traders. Often novices trade so aggressively that a small string of losses will wipe out their trading capital. The primary goal to trading should be to stay in the game. Time is on your side. A system or method with positive expectation eventually will make your rich, sometimes beyond your wildest dreams. This can happen only if you can continue trading.

• Anyone trading aggressively will be much more likely to lose everything in the event of a disaster of unprecedented scale. This is something to keep in mind as you hear the siren call of 100 percent plus returns. 

• Various tests have shown that trading without a stop loss yields better results. The system designed and used at Stocks & Bulls does not have a preset stop loss; the system generates one according to market conditions. Essentially there is a stop-loss; it is simply invisible.

• With experience, one realizes that there is no such thing as a perfect system. 

• Robust trading is about building a trading system that will perform well no matter what the future brings. The primary ways to make systems more robust is to have rules that allow those systems to adapt to different market conditions and to keep the system simple and less susceptible to changes in the market. One of the most effective ways to improve the robustness of the overall trading is to include a diverse range of markets.

• The primary reason for not trading a market is liquidity. 

• The ego is not your friend as a trader. The ego wants to be right, it wants to predict, and it wants to know secrets. The ego makes it much more difficult to trade well by avoiding the cognitive biases that hinder profits.

• Some people may find this hard to believe since trading seems like a very exciting job to outsiders, but at time when we are trading we do absolutely nothing other than search for the best stocks for future potential trading. The markets are sometimes quiet. At other time everything seems to be happening at the same time and it gets very hectic. 

• Successful traders don’t care about the money. They care about trading well.

• Getting out of a losing position when the rules of a system dictate doing that is critical. Traders who do not cut their losses will not be successful in the long term. 

• Most successful traders use a mechanical trading system. This is not a coincidence. A good mechanical trading system automates the entire process of trading. The system provides answers for each of the decisions a trader must make while trading. It makes it easier for a trader to trade consistently because there is a set of rules that specifically define exactly what should be done. The mechanics of trading are not left up to the judgement of the trader. If you know that your system makes money over the long run, it is easier to take the signals and trade accordingly to the system during periods of losses. If you are relying on your own judgement when you are trading, you may find that you are fearful when you should be bold, and courageous when you should be cautious. If you have a mechanical trading system that works and follow it consistently, your trading will be consistent despite the inner emotional struggles that may result after some losses or a large profit. The confidence, consistency, and discipline afforded by a thoroughly tested mechanical system are the key to many of the most profitable traders` success.

             Bibliography: "The Way of the Turtle" by Curtis M. Faith. Publisher: McGraw-Hill.