Trading Wisdom from Richard D. Wyckoff and Ending Trading Statement Balance for Week

Hello Traders,

Today I want to continue my discussion about some trading wisdom from the trading masters.  In today’s topic, I am borrowing some trading wisdom from Richard D. Wyckoff.

Richard D. Wyckoff

“You can learn from this how to develop independent judgment, so that you need never ask anyone’s opinion or listen to anyone’s tips, or take anyone’s advice.  You can so train your judgment that you will know just what to do and when to do it.  When you are in doubt you will do nothing.”Richard D. Wyckoff

Wyckoff was talking here about trading.  He was talking on the subject of studying the markets to determine how they operate.  You will find developing your own trading strategy/method can be the most rewarding and challenging experience of your lifetime.  You need to be comfortable with the risk, before you are comfortable with the reward.  There is an age old saying, ‘If you can’t stand the heat, then stay out of the kitchen.’

As traders, we are exposed on a daily basis to the trading concepts of risk and reward.  Personally, my own reward to risk tolerance took some time for me to feel comfortable with it.  How much do you want to risk on each trade, and how much are you looking to make at a minimum?

Are you at its minimum profit objective going to make more money than you risk?  So if you would take two trades, and one would win and the other would hit your stop loss, would you turn a small profit on your trading?  Obviously, the goal of every trader should be the three general trading rules.

3 General Trading Rules: 

  1. Cut Your Losses Short
  2. Let Your Profits Run
  3. Take Profits On The Ride

What I found out over time, as a trader,  the hardest component of a trading plan is to stick with it when you are winning.  You will find it is easy for a trade to take out your stop loss, because you have mentally prepared yourself for it.

But on the other hand, you may find where do you take profit the hardest component to quantify as a trader.  What I believe for my own personal reward/risk trading strategy/method is to set up for a minimum 2.5 to 1 on every trade.

Be happy to move out of a trade a break even, if it doesn’t set up correctly.  You should find two words to be a part of your trading plan:  flexibility and change.  These two words will be your best friend, if you use them properly.

Wyckoff goes on to say to trust no one’s opinion or tip.  Do your own trading is what I gather from what he is trying to tell us.  To allow yourself the ability to succeed or fail on your own without utilizing other people’s advice no matter how well intended it may be.

You can learn from other trader’s, but your trading decisions should in the end be your own.  OWN YOUR TRADING PLAN!

The last part of Wyckoff’s trading advice can not be overlooked.  You need to find a way to stay away from markets that are not operating according to your trading rules.  The best place to be, but also the hardest thing to do is to stand aside as a trader.This is a business where it is very easy to lose money doing.

This ‘game’ is rigged!  The faster you understand this … the better off as a trader you will be, in my very, very humble opinion.

Here is my trading from Friday:  March 23rd, 2012:  Trading Statement

Please take note, I was able to achieve the 1st STAB on my trading account again, and will be wiring out $625.00 on Monday.  Have a great and blessed rest of the weekend.

Good Trading,

David ‘Tiger’ Knight

About The Author

David M. Knight

I am a 30 Year Futures and Commodities Trading Veteran. In addition, I enjoy games of skill and chance like: poker, craps, blackjack and roulette. During my professional career, I have developed and implemented successful trading strategies and methods; along with winning systems in games of skill and chance. Join with me on our mutual journey together.