Before beginning to buy and sell altcoins – let’s review two simple and profound risk control rules that can help protect you from losing money, and from the demoralizing effects of losing money.
A Phantom To The Rescue
It was in the Autumn of 1997. Two years into my trading education. I had lost my entire trading account – not once, but twice. And now I was seeking answers to help my trading improve.
I was participating in a well-known futures trading forum when Art Simpson and ‘Phantom of The Pits’ were slowly releasing each of the chapters in the book that Phantom wrote. Long ago received permission to share this book from the author; Art Simpson.
If you have been struggling to be profitable in your trading, your next required reading could uncover the keys to shift the odds into your favor!
You can find this same PDF if you google ‘Phantom Of The Pits’ – but I wanted to keep a copy handy for myself, so I created this shortlink to the PDF that I uploaded to ensure you easily find a copy to download and print.
Our community of traders refer to Rule #1 and Rule #2 all the time, and often without the full explanation – the live reading below may help, but it will be up to you to carefully study Phantom’s work like your money depends on it – in order to appreciate the profound implications that each rule brings to your trading strategies.
Before you consider placing a speculative trade:
you must be able to repeat Rule #1 and Rule #2, from memory – out loud – without reading them.
These two rules are simple to memorize and state. That’s part of their beauty. But these two short and simple rules have profound implications on your trading – no matter what trading methodology you may favour, be it chart patterns and technical analysis or be it fundamental analysis and news events… these two rules can shift the odds in a game that is normally stacked against you.
Rule #1 – Assume you are wrong when placing a trade – Reduce or remove your position unless it proves you correct.
Rule #2 – Add to your position correctly, without exception.
One of my favorite quotes from Phantom of the Pits
“The best time to learn about the markets is when the markets are closed.”
If you are serious about making money trading in any markets – read this book several times to help you develop these key risk control habits.
Learn this before you trade, just as a pilot learns and practices in simulations before they fly for real.
Now, after years of carefully practicing Rule 1 and 2, I feel like I am getting into the habits of thinking Rule #1 and Rule #2 – and can easily pick out my trading signals – applying Rule #1 at the start of (almost) all my trades, and, can now patiently wait for the results to come in.