The Fundamentals of Trading

Why the fundamentals matter

Consistent profitability is the byproduct of consistent behavior, and consistent behavior comes from understanding the fundamentals and following them. The fundamentals are the framework every trade runs through. If one of them is not clearly understood or consistently applied, the result is inconsistency, even when the strategy itself may be fine.

They also work together. A strategy with no edge cannot be saved by good psychology. An edge means little if execution is inconsistent. Review is what tells you which layer is the problem. Start with the simple version of each below, then go deeper where you need to.

The six fundamentals

Each guide explains one fundamental in plain language and links into the deeper lessons.

• What Is a Trading Edge A measurable advantage that shows up over a large sample of trades, not in any single result.
• What Is a Trading Strategy The fixed rules that define what you trade, when a trade is valid, and where you enter and exit.
• What Is Risk Management in Trading Deciding how much you are willing to lose before you enter, so a losing streak stays recoverable.
• What Is Trading Psychology The beliefs and emotional control that let you follow your plan instead of reacting to one outcome.
• What Is Trade Execution Following your plan in real time. The gap between a strategy edge and your actual results.
• What Is Trade Review Measuring your trades so you can improve them, judged on whether you followed the plan.