What I Don't Trade (and Why)
Professional trading is less about finding winning trades and more about ruthlessly avoiding losing situations.
What this lesson covers
- Don't trade hope at obvious levels.
- Don't trade your ego after a win.
- Don't trade a strategy the market retired.
- Avoid traps, don't provide the liquidity.
Your edge is defined by the trades you refuse to take.
Knowledge check
3 questions1. What defines your edge in this lesson?
2. What should you not trade after a big win?
3. A strategy the market has "retired" should be…
Full transcript
Everyone wants to know my hot trades. The real question is what I refuse to trade. Survival in this game is about avoidance. It's about knowing what to leave alone.
First, I don’t trade hope. Hope is the emotion the market weaponizes at obvious levels. You see a stock grinding toward a clean resistance line. Everyone sees it. The breakout feels inevitable. That’s not a signal. That's a trap. It’s a liquidity event designed to get someone to buy the top so professionals can sell. When you feel that surge of hope that a stock is about to "go," I feel suspicion. Hope is not an edge.
Second, I don’t trade my own ego. Winning streaks are more dangerous than losing streaks. A few big wins and you feel invincible. You start thinking the market owes you. You size up too fast. You widen your stops. You stop demanding confirmation. This isn't confidence, it's complacency. The moment I feel "locked in," I get defensive. I reduce size. I get more selective. I don't let a good run make me stupid.
Third, I don't trade a dead strategy. Edges erode. They don't die overnight, they just stop working as well. The follow-through gets weaker. The clean wins turn into choppy fights. Most traders call this "bad luck" and keep forcing the same trades. They start fighting the market. A drawdown isn't a personal insult; it's information. It's the market telling you the game has changed. When my setups stop paying, I stop trading them. I don’t argue. I adapt.
I see it every day. A stock runs to a key whole number, say $100. It punches through on a spike of volume and the alerts go wild. That’s the hope trade. That’s the ego trade. That’s where retail provides the liquidity for institutions to unload their inventory. The breakout fails, price slams back down, and the hope turns to panic. I don't trade breakouts. I trade failed structure. It's a completely different business.
Your job isn't to find every winner. Your job is to avoid every stupid loss. The trades you skip are just as important as the ones you take.