Vigilance

Vigilance is the non-stop guarding and protecting of important things. In trading there is nothing more important than money. The Professional Trader takes his money very seriously and has given it a more serious term: “Capital”. Capital is everything to the winning trader. It is not just the end goal, it is the means and the source before, during and after the trades. The Professional Trader guards his capital very closely because it will allow him to trade today, tomorrow, next week, next month and next year and beyond. If capital is not protected at all times, then the entire effort for the year can be gone and future opportunities are severely limited. Vigilance in trading means holding the protection of your money, your capital as your constant highest priority. Properly protecting your capital includes starting with enough to trade wisely and be able to stay in the game when the inevitable downturns and losing streaks occur. It includes making sure you are not risking too much on any one given trade and are using sound money management rules to have a decent risk to reward ratio at all times. It also includes not wasting it on unnecessary items such as taxes or extravagant computers. Warren Buffet lives by two rules. 1: Never lose money. 2: Never violate rule #1.

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