The Five Fundamental Truths 1. Anything can happen. 2. You donât need to know what is going to happen next in order to make money. 3. There is a random distribution between wins and losses for any given set of variables that define an edge. 4. An edge is nothing more than an indication of a higher probability of one thing happening over another. 5. Every moment in the market is unique. The Seven Principles of Consistency 1. I objectively identify my edges. 2. I predefine the risk of every trade. 3. I completely accept the risk or I am willing to let go of the trade. 4. I act on my edges without reservation or hesitation. 5. I pay myself as the market makes money available to me. 6. I continually monitor my susceptibility for making errors. 7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them. Trading Errors 1. Not Predefining risk before entering a trade. 2. Not cutting your losses. 3. Letting a winning trade turn into a loser without taking any profits. Have an organized, systematic, money- management regimen for taking profits when the market goes in the direction of your trade. The Three Stages of Trading The mechanical stage 1. Build the self-trust necessary to operate in an unlimited environment. 2. Learn to flawlessly execute a trading system. 3. Train your mind to think in probabilities (the five fundamental truths). 4. Create a strong, unshakeable belief in your consistency as a trader. The subjective stage 1. Use anything you have ever learned about the nature of the market movement to do whatever it is you want to do. 2. Learn how to monitor your susceptibility to make the kind of trading errors that are the result of any unresolved self-evaluation issues. The intuitive stage 1. Work at setting up a state of mind most conductive to receiving and acting on your intuitive impulses.