Let me share with you the 4 pillars of Ed Seykota, one of the top traders and hedge fund manager featured on Market Wizards books by Jack Schwager. These are the 4 pillars: 1) trading system must be mechanical, 2) cut your losses and let your winners run, 3) bet small, 4) be humble. Trading system must be mechanical, removes human emotions from the trading and lets the trade go on, win or loss, subject to risk management already put in. Cutting your losses and letting your winners run, most retail traders do the opposite, hang on to losers as losses mount and take small profits. What you need is small losses and large winners, even if just a handful of them. Betting small means risking only 2% per multiple academic studies to minimize the chances of blowing out your account and losing all your monies. Being humble removes your ego from your trading which would make you think you are a genius when your trades work out but, what about the times you lose out? My comments are my own and although, I am trying to model my trading to Ed Seykota's approach, I do not know his trading methods which he keeps to himself. I believe if you can stick to the 4 pillars and use it in your trading, you can do quite well in the stockmarket.
