I have a trader friend who blew up his account early on. Later, he survived by sticking to a strict "no opening positions" rule, and he's been much more stable than before.

He once said something I’ve always remembered: "Misreading the trend costs money; losing control costs your life."

That was when he was at his worst, hitting stop-loss seven or eight times in a row.

It wasn’t that his direction was completely wrong, but that he was trading too frequently—watching Bitcoin during the day, altcoins at night, dozens of trades without stopping.

He clearly should have taken a break, but he just couldn’t stop.

Later, he reflected deeply and set five rules for himself, posted on his computer screen.

Before opening a position, he must review these rules; if one isn’t met, he doesn’t trade that day.

Rule 1: Don’t trade in the middle.

He only does two things—wait until it hits support or resistance levels.

The middle zone, with its ups and downs, looks lively, but he avoids trading there.

"Want to catch fish? Only eat the head and tail. The middle has the most bones and is easy to choke on."

Rule 2: Don’t guess the market.

He can try to catch reversals, but he waits for the market to move on its own.

Before the candlestick breaks through a key level, all "I think" are just self-deception.

Rule 3: Don’t listen to feelings, only follow the system.

He says the most dangerous thing isn’t a bad market, but when "the feeling comes."

When the feeling hits, people tend to get carried away, and placing orders becomes easy to lose.

He only trusts one thing: Has the system signal appeared?

If not, he stays put.

Rule 4: If you don’t know where to set your stop-loss, don’t open the trade.

This is his strictest rule. If he hesitates over where to place the stop-loss before opening a trade, he simply doesn’t trade.

"Hesitating over stop-loss means you don’t understand how to do this trade at all. If you don’t understand, but still trade, that’s not trading—that’s clogging."

Rule 5: Do the math—if the potential loss is 5 points but the maximum gain is only 3 points, don’t take the trade.

The simplest and most rational final rule: if the risk-reward ratio isn’t favorable, don’t trade.

"Even if the direction is right, it’s useless. The account is already losing from the start. Why should I think I can win?"

These five rules helped him resist countless urges to trade impulsively.

Later, I asked him: Won’t you miss many opportunities this way?

He looked over his screen again and said:

"Markets open every day, opportunities are always there. But if you can’t control your hands, you won’t live to see those opportunities come."

If you also want to learn how to protect your capital and never miss an opportunity, come find me. I’ll teach you step by step!