A. Capital comes in two varieties:
Mental and that which is in your pocket or account. Of the two types of capital, the mental one is the more important and expensive of the two. Holding to losing positions costs measurable sums of actual capital, but it costs immeasurable sums of mental capital!
B. In bull markets you can only be long or neutral, and in bear markets you can only be short or neutral:
That may seem self-evident. It is not, and it is a lesson learned too late by far too many!
C. Markets can remain illogical longer than you can remain solvent:
Illogic often reigns and markets are enormously inefficient despite what the academics believe!
D. To trade successfully, think like a fundamentalist and trade like a technician:
It is imperative to understand the fundamentals driving a trade, but also to understand the market’s technicals.
When you do, then, and only then, you can or should you, trade.
E. An understanding of mass psychology is often more important than an understanding of economics:
Markets are driven by human beings making human errors and also making super-human insights!