This is a summary of the main ideas of a book that I found very interesting, Good Trades Bad Trades by Steve Burns. Please read it.

Part 1. Train your mind to survive in the trading game

  • Good trades are made with complete confidence and adherence to your trading method. Bad trades are made based on an opinion.

  • Good trades are made with disciplined position size and entries. Bad trades are made to recoup losses the market owes you.

  • Good trades are made when your entry parameters are right. Bad trades are made out of fear of missing out on a price move.

  • Good trades are profitable according to your trading plan. Bad trades are made out of greed to make a lot of money quickly.

  • Good trades are made according to your trading plan. Bad trades are made to inflate the ego.

  • Good trades are made without regret or inner conflict. Bad trades are made when a trader hesitates;

Part 2. Creating a Powerful Method

  • Good trading is based on your trading plan. Bad trading is based on emotions and beliefs.

  • Good trading is based on your personal edge. Bad trading is based on your opinion.

  • Good trades are made on your own time frame. Bad trades change time frames due to losses.

  • Good trades are made based on current price reality. Bad trades are made based on personal judgment.

  • Good trades are made after identifying and trading with the trend. Bad trades are made against the trend.

  • Good trades are made using trades that you are an expert in. Bad trades are made using trades that you are unfamiliar with.

Part 3. Managing Risk to Stay in the Game

  • Good trade risk is only 1% of total trading capital. Bad trade has no certain level of risk.

  • Good trades risk $1 to make $3. Bad trades risk more loss than expected profit.

  • A good trade follows the trading plan even when the account equity is reduced. A bad trade is a large trade made to make a quick profit after a series of losses.

  • Good trades have limited risk but unlimited potential. Bad trades have unlimited risk but limited profit.

  • Good trades have optimal position size for that trade setup. Bad trades are based on emotions, financial need or confidence in a trade.

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