This week on Money & Investing, Mitch Olarenshaw and I share 10 trading lessons learnt from working alongside professional traders, focusing on risk management, emotional control and the habits that support consistent trading decisions.
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1. Master Emotional Control
Successful trading requires keeping emotions out of decisions. Fear, greed and frustration can lead to costly mistakes. Following a clear process helps traders remain objective during market volatility.
2. Put Risk Before Reward
Professional traders assess potential losses before considering profits. Understanding the downside of every investment helps prevent emotional decisions and unnecessary financial exposure.
3. Follow a Written Trading Plan
A trading plan outlines entry points, exit strategies and risk management rules. Having a structured approach reduces impulsive decisions and provides direction when market conditions change.
4. Manage Your Position Sizing
Position sizing is an important part of protecting capital. Professional traders adjust their exposure based on market conditions, confidence and the level of risk involved.
5. Recognise Losing Streaks
Losing streaks are part of trading. Tracking your equity curve helps identify declining performance and signals when to reduce position sizes rather than chase losses through revenge trading.
6. Capitalise on Winning Streaks
Professional traders recognise when their strategies are performing well. Increasing position sizes during favourable conditions can help maximise opportunities while maintaining disciplined risk management.
7. Build a Consistent Daily Routine
A structured routine supports clearer thinking and better decisions. Preparing mentally and physically before trading helps reduce distractions and maintain focus.
8. Conduct Your Own Market Research
Professional traders dedicate time to reviewing financial news, market movements and company fundamentals. Independent research helps develop informed trading decisions rather than relying on headlines alone.
9. Learn to Ignore Market Noise
Constant market commentary and conflicting opinions can affect judgement. Filtering information and focusing on reliable sources helps traders stay objective and follow their strategies.
10. Know When to Take a Break
Stepping away from the markets allows traders to recover mentally and return with a fresh perspective. Taking regular breaks can support long-term discipline and prevent emotional exhaustion.
Disclaimer: Wealth Magnet Pty Ltd (ABN 52 618 868 830) trading as Australian Investment Education is a Corporate Authorised Representative (CAR no. 1255231) of Grange Financial Services Pty Ltd (AFSL No. 488609).
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.