Interview: Essential Strategies for Successful, Long-Term Trading

As a trader, there are several things you DON'T want to do:

1. Spend time trying to predict a market's future
2. Put too much capital at risk
3. Don't let profitable trades turn into losing trades

In this practical discussion, Glenn Neely underscores the importance of capital preservation for long-term trading success. Key points include:

1. Understand that trading is not about what you believe is going to happen in a market – it's about what is actually happening in that market. In other words, focus on the present instead of trying to predict the future.
2. First, control risk; second, avoid loss. Never risk more than 2% of capital on any given trade (keep risk at 1% while you're learning), because it's extremely difficult to make up for past, large losses.
3. Use a strategy that helps you manage your emotions – a strategy that does not involve market prediction. Why? Predictions connect your ego to the result, which causes people to favor protecting their ego over protecting their money. Don't focus on being right; focus on making money!

In this brief discussion, Mr. Neely details a step-by-step approach he uses to minimize losses and let profits run – while protecting capital and staying off the emotional rollercoaster.