5 Simple Things All Wealthy Traders Do To Gain An Edge

At one point I considered myself the luckiest person in the trading world because I was surrounded by trading experts, and had instant access to almost anyone. I lost that title after I met Tim Bourquin, Co-Founder of TraderInterviews.com. See Tim has the platform to basically ask ANY question he wants to ANY trader he wants...and he records it for his future use. Thankfully he opened his records for people like you and I to learn from and in this article he teaches us 5 things that he's learned from the hundreds of experts he's interviewed. Enjoy the article, comment below, and take time to visit TraderInterviews.com.


Over the past year I’ve spoken to hundreds of traders, many of which were recorded and posted at TraderInterviews.com.  If you had asked me a few years ago how the best traders approached the markets, I would have said that they all had similar strategies.  But after talking with traders of every market imaginable, I’ve found they all have very different methods.

However, while they each may use wildly different techniques (I spoke with one very wealthy trader who confirmed his chart patterns by looking at planetary movement and moon phases), all of them follow five rules without exception.   Some of them make hundreds of thousands – even millions – of dollars each trading their own account.  These aren’t your typical “always use a hard stop loss” type of rules .  These are actual guidelines successful traders follow religiously.

In fact, I’d bet that deep down you know you should be following these rules as well but you aren’t – yet.  Today is the day you can commit to doing what works for other wealthy traders and get on that same path.

Let’s get started.

1. They plan every single trade.  EVERY SINGLE ONE.
Every trader I’ve talked with that makes money consistently knows the following about every single trade they take before they even begin entering a limit order into their trading platform:

a) the highest price they are willing to pay (if they are going long) or the lowest price at which they are willing to sell (if they are going short)
b) their profit target where they will exit if they are “right”
c) their stop loss where they will exit if they are “wrong”
d) the risk/reward ratio of the trade
e) the exact percentage of their account they are risking

Lots of traders do one or two of these things.  Few do all of them.  In simple terms they know exactly what they want to pay, how much money they anticipate making (or losing) and a very clear idea on the probability of the trade working out.

Although you might think that every great trader uses hard stops that are pre-programmed in, many don’t . However, they are highly disciplined and when their stop loss number comes up they are out.  Most traders don’t have that type of hard-core discipline and so a hard stop loss is still their best option.

2. They stopped trying to pick tops and bottoms years ago
Nearly all of the classes, courses and webinars you’ll find on the Internet talk about using support and resistance of some type to find where a market is turning and how to get in before or while it does.

The funny thing is that only a very few successful traders I have ever talked to trade that way.  Simply put, 95% of the traders out there that make money are buying higher highs and selling lower lows.  They do the exact opposite of nearly everyone out there because they found out long ago that picking tops and bottoms is a sucker’s bet.  One trader described it to me by saying that it’s much easier to just participate in what a market is already doing than trying to guess when that behavior will change.  Flip-flop your strategy to agree with what the market is doing rather than guessing on when it will change its mind, and you’ll be in a much better position to make money trading.

3. They are patient with winners – and ridiculously impatient with losers.
Dennis Gartman is famous for boiling down great trading to one thing: “Do more of what is working and less of what isn’t.”   Sure makes a lot of sense to me.

Most traders have a great deal of patience with their losers but get nervous about locking in gains and sell them to quickly – the exact opposite of what wealthy traders do.  Wealthy traders realize that they may actually have more losing trades than winning trades so they quickly get out when they are wrong.  It is the only way to ensure that they can give their winners the attention they deserve.

They coddle their winners and kick their losers to the curb without a second thought.

4. They trade one market.  ONE
I’ve talked with great traders who can trade futures, forex and stocks at the same time.  They are a gifted tiny minority.

The vast majority of successful traders concentrate on one market and become so comfortable with it that they begin to “know” the behavior of that market just watching price and volume.  Test yourself – if you aren’t able to get rid of all your charts and simply look at price and volume to trade, you’re probably not concentrating enough on one market in order to know it’s moods.  What we’re really talking about here, of course, is not the mood of the market itself but the moods of the market participants!

Focus on trading one market exceptionally well rather than try to trade whatever’s hot – that’s how wealthy traders do it.

5. Their benchmark for success is anything but money
Money changes everything.  It sure does.  We’re all in this to make money.  The trouble is, when traders use the amount of money they make to judge their own success, something happens to them – to all of us, really – that clouds our decision-making ability.

Wealthy traders have realized this and instead focus on other things to determine if they’ve had a successful day. Whether it be how well they were able to execute on their trading plan (see rule #1), or their overall ability to predict short-term movements in the whatever they are trading, they know that if they do those things correctly, the money will follow.

Yes of course the money is important.  Any trader who says otherwise is a fool.  Why else would we put ourselves through this daily ride.  But there is something about making it a secondary focus that allows the best traders to make better decisions.  The growing trading account simply becomes a nice result – a side benefit if you will – of making good decisions and reading the market well.

Tim Bourquin
Co-Founder of TraderInterviews.com

10 thoughts on “5 Simple Things All Wealthy Traders Do To Gain An Edge

  1. Chose one market. Sounds like this is geared to futures or Forex traders. If you are buying stocks how do you chose one market?
    I would like Adams take on this. How do you chose one market in trading equities.

  2. Herbert: Thanks glad you found it useful

    Charles: You're on the right track. When I say buying higher highs, the traders I've spoken with still try to get a great price, and that may mean waiting for a temporary pullback, so you're still in line with what they say is the right way to trade. It's when traders try to find a major reversal of the overall trend in order to get that "home run" trade that they get themselves into trouble.

  3. Tim, A great article, in my short learning curve in the "trader" business I can attest to each rule.

    I am confused by part of #2 where you say "buying higher highs and selling lower lows". I agree trying to pick the top or the bottom of a reversal is a fruitless endeavor. But I do try to buy the lows of a cycle in a uptrend (or a breakout)and sell at my target with a trailing stop loss which is long before the "lower lows". Am I doing it wrong or do I not understand your comment?

    Your comment would seem to indicate only buying breakouts (higher highs).

  4. Really enjoyed the article and found that I was the one not doing the things that makes a great trader. I would use some of the steps but many I would not look at. I would look at entry point, stop, and price then I would make the move.

    But while making the move my account was helping someone else now I am trying to be more patient and consistent with my approch.

    Thanks for the article it re-enforce a learned and ignored disciples.

    Herbert Stroman

  5. I'm a HIGHLY disciplined trader. I have my profit levels that I take profits on no matter how high I "think" it going to go. I don't sell the whole position at these levels -- just the percentage that I've determined.

    Once, I've recoveered all of my investment, then -- and only then -- I place a trailing stop loss on "The House's Money" (a specific dollar amount rather than an ever expanding percentage).

    On Stop Limits (not stop losses), I sell the whole position. There is a REASON it went down. I've made the mistake of re-entering too soon. IF, I re-enter the position, I have a new level that it has to reach to regain confidence.

    Works for me. Your mileage may vary. 🙂

  6. Ralph, in case you use moving/trailing stop you got an issue. when the marekt move in your favour the stop is readjusted, when moving against the tendency it is taking you out.

    Until now everything is aligned with your view.

    However, most of the time, you don't want to get out on a simple swing against you. However, because the stop was readjusted vs the last high (for a bull tendency)now it is taking you out even though the trend continues through this correction.


  7. I have commented on this before. To me, there's an inconsistency between "have a profit target and get out when you reach it" and "let your winners ride." I know it is more complicated than this but, simply stated, why not set a moving stop and let the market take you out of almost every trade?

    1. That's also a good strategy Ralph. I suppose traders who don't have accounts large enough to float multiple positions at one time and want to take advantage of another opportunity they spot elsewhere would need to close out their current profit in order to do so. That would be the only reason I can think of not to use the trailing stop. Otherwise, you are absolutely correct. Let the market tell you when it's done moving in your direction.

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