Phoenix im glad you are inspired and I hope you will continue to share your insights here so we all can benefit 
[B]Minor Axiom I
Always play for meaningful stakes.
âOnly bet what you can afford to lose,â says the old bromide. You hear it in Las Vegas, on Wall Street, and wherever people risk money to get more money. You read it in books of investment and money-management advice by conventional counselors. It is repeated so often and in so many places that it has taken on an aura of truth through assertion
As most people interpret it, it is a formula that almost assures poor results.
What is an amount that you can âafford to loseâ? Most would define it as âan amount which, if I lose it, wonât hurt.â Or âan amount which, if I lose it, wonât make any significant difference in my general financial well-being.â
But consider this. If you bet $100 and double your money, youâre still poor. The only way to beat the system is to play for meaningful stakes. This doesnât mean you should bet amounts whose loss would bankrupt you. Youâve got to pay the rent and feed the kids, after all. But it does mean you must get over the fear of being hurt.
If an amount is so small that its loss wonât make any significant difference, then it isnât likely to bring you any significant gain either.
In the normal course of speculative play, you must start out with a willingness to be hurt, if only slightly. Bet amounts that worry you, if only a little. Perhaps you will want to start out modestly and then increase the dosage of worry as you gain experience and confidence in your own tough psyche.
Every speculator finds his or her own level of tolerable risk. Some, like Jesse Livermore, bet so boldly that they can go broke with spectacular speed â and as weâve noted, Livermore did, four times. His risk level was so high that it scared other speculators, even veteran ones. Frank Henry used to study Livermoreâs gambles and come home shaking his head in stunned amazement. âThat man is mad!â Frank Henry would say.
Another man who believed in playing for meaningful stakes was J. Paul Getty, the oil tycoon. His story is instructive. Most people seem to think he inherited his huge wealth from his father, or at least inherited the seeds of it. The facts are quite otherwise. J. Paul Getty made that monumental pile on his own, beginning as an ordinary middle-class speculator like you and me.
It irritated him beyond endurance that people thought he had had life handed to him on a silver platter.
People evidently found it too hard to believe that a man could start with a modest, middle-class kind of stake and make a billion on his own. But that is exactly what Getty did.
The senior Getty, George F., was a Minneapolis lawyer and self-taught speculator who struck it rich in the Oklahoma oil boom at the start of the century, He was a man with stern, unbending beliefs rooted in the Work Ethic. As J. Paul wrote in Playboy, âGeorge F. rejected any ideas that a successful manâs son should be pampered or spoiled or given money as a gift after he was old enough to earn his own living.â And so young J. Paul struck out to seek his fortune on his own.
He accumulated a few hundred dollars. As his little pile grew, so did the urge to put it at risk. It was now that he displayed his understanding of the principle underlying Minor Axiom I. He had learned this principle from his father. Always play for meaningful stakes.
He could have bought a piece of the action for $50 or even less. There was no shortage of opportunities to do this. The oilfields swarmed with wildcatters and speculative syndicates that needed money to continue drilling. They would sell tiny shares to anybody with a few bucks. But Getty knew he would never get rich on tiny shares.
Instead he went after something bigger. Near the little hamlet of Stone Bluff, another speculator was offering a half share in an oil lease that looked promising to Getty. He decided to bet on it. He bid $500, nearly his entire wad. Nobody topped his bid, and J. Paul Getty was officially in the oil business. In January 1916, the first test well on the lease hit pay dirt more than 700 barrels of crude oil a day. Not much later, Getty sold his interest for $12,000, and that was how his fabled fortune was founded. âOf course, I was lucky,â he said many years later, looking back on that seminal adventure of long ago. "I could have lost. But even if I had, that wouldnât have changed my conviction that I was right to take the chance.
âSo it seemed to me I had a lot more to win than lose,â he reminisced. "If I won, it would be various kinds of wonderful. If I lost, it would hurt, but not all that much. The right course of action seemed clear.
What would you have done?"
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guys ive posted a pdf of The Zurich Axioms in my first post for anyone who wants a digital copy.
As if I needed an excuse to spend more time reading BabyPipsâ posts. 
Yet another substantial, meaningful and wonderful axiom to learn from.
I donât necessarily agree wholeheartedly with Gettyâs view, however, i do understand that you need to risk at least a respectable sum that will worry you a bit, in order to gain a much more massive sum. To me, this hints at risk::reward ratio.
Thanks for uploading the .pdf. Iâm afraid i might get too excited and devour the whole thing in blazing speed. With that said, you continuing your posts with them daily has more added effect because people will have to wait a day before the next axiom, and in turn, will have ample time to digest the axioms and really absorb them.
Johnny, I stumbled across that PDF last week on another site, and devoured the whole thing in two days (I literally could not force myself to stop reading this book after the first chapter). Now my official paperback version has arrived in the mail (yesterday) and Iâm already halfway through it again. I agree that the Zurich Axioms are amazing gems of wisdom, and I believe they can help every trader regardless of skill level or experience. More importantly, they are [B]practical[/B] instead of academic theory. Iâm thrilled that you started this thread, and I canât wait to see how it shapes up. I hope that we can all apply the Zurich Axioms and become filthy rich(er)! 
Thanks A is A
welcome to babypips. I have been waiting to see if there was any interest in me continueing. I was copying and pasting the Axioms 1 at a time but it is very time consuming and I have to edit them down. I will continue if others are interested or for the sake of smaller posts we can agree to do âhomeworkâ and read from the pdf 1 axiom at a time then discuss it here.
For anyone who doesnt know I have attached the pdf to the first post.
let me know what you want to do guys. I donât mind going through the effort to post the axioms one at a time if people are interested.
thanks, john
Why not focus on the Major Axioms and throw in the Minor Axioms only rarely as the thread discussion evolves? Perhaps simply posting each Major axiom, along with a quick one-paragraph explanation would suffice to spread word about the book. After that, it would be up to each person to do their own homework and post their thoughts. Aside from that suggestion, Iâm not sure how to cut down on the time necessary for posting⌠Mr. Gunther used 160+ pages to describe the reasoning behind the 12 Major Axioms & 16 Minor Axioms, and each page seems to have a valuable anecdote to remember. Reading a book is something that requires individual initiative, and unfortunately not everyone in the forum will be interested in reading the book regardless of its value and its low page count. :rolleyes:
[B]The Second Major Axiom
ON GREED
Always take your profit too soon.
Amateurs on Wall Street do it. Amateurs in poker games do it. Amateurs everywhere do it. They stay too long and lose. What makes them do it is greed, and that is what the Second Axiom is about. If you can conquer greed, that one act of self-control will make you a better speculator
than 99 percent of other men and women who are scrambling after wealth.
But it is a hard act to pull off successfully. Greed is built into the human psyche. Most of us have it in big amounts. It has probably inspired more Sunday sermons than any other of our less than laudable traits. The sermons tend to have a despairing sound, with sighs for periods. The despair stems from the feeling that greed is so deeply entrenched in our souls that we can no more easily extract it than change the color of our eyes. Patently, it cannot be exorcised by sermons. Sermons have never had the slightest
effect against it. You are not likely to conquer it either by listening to other peopleâs sermons or by preaching at yourself. A more pragmatic and promising course would be to think about the rich, strange paradox that lies at the heart of the Second Axiom: by reducing your greed, you improve your chances of getting rich. Letâs pause to define our terms. Greed, in the context of the Second Axiom, means excessive acquisitiveness: wanting more, more, always more. It means wanting more than you came in for or more than you have a right to expect. It means losing control
of your desire.
Greed is the bloated, self-destructive cousin of acquisitiveness. As we use the term here, âacquisitivenessâ is the natural wish to improve oneâs material wellbeing. were put together by people with a healthy dose of acquisitiveness, and it is unlikely you would be studying the Axioms unless you, too, had the trait. Every animal on earth has the instinct to acquire food, a nesting place, and the means of self protection, and in this respect we differ from other creatures only in that our wants are more complicated. Donât be ashamed of being an acquirer. The trait is part of your survival equipment.
But acquisitiveness gone haywire, acquisitiveness gone out of control to the extent that it defeats its own purposes â that is greed. Fear and hate it. It is a speculatorâs enemy.
âDonât stretch your luck.â Most people use it in casual speech without understanding that it has a serious meaning. It deserves more careful study than it usually gets. What it means is this. In the course of gambling or speculative play, you will from time to time enjoy streaks and runs of luck. You will enjoy them so much that you will want to ride them for ever and ever. Undoubtedly you will have the good sense to recognize that they cannot last forever, but if greed has you in its grip, you will talk yourself into hoping or believing that they will at least last a long time . . . and then a
bit longer ⌠and then just a little longer. And so you will ride and ride, and in the end you and your money will go over the falls.
We will study the troublesome phenomenon of winning streaks in more detail when we come to the Fifth Axiom. (The Axioms are intricately interwoven.
It is hardly possible to talk about one without mentioning others.) For now, the point to be appreciated is that you cannot know in advance how long a given winning streak is going to last. It might last a long time. On the other hand, it might end with the next tick of the clock.
What should you do, then? You should assume that any set or series of events producing a gain for you will be of short duration, and that your profit, therefore, wonât be extravagantly big. Yes, certainly, that lovely set of events might continue until it produces a colossal win. Might. But from where you stand at the beginning of the set, needing to make a sit-or-quit decision without being able to see the future, you are much better off
playing the averages. The averages overwhelmingly favor quitting early.
Long, high winning streaks make news and get talked about at parties, but they are newsworthy for the very reason that they are rare. Short, modest ones are vastly more common. Always bet on the short and modest. Donât let greed get you. When you have a good profit, cash out and walk away.
Once in a while you will regret having walked away. The winning set will continue without you, and you will be left morosely counting all the money you didnât make. In hindsight, your decision to quit will look wrong. This depressing experience happens to every speculator once in a while, and I wonât try to minimize it. It can make you want to cry. But cheer up. To match against the time or two when the decision to quit early turns out wrong, there will be a dozen or two dozen times when it turns out right.
In the long run, you make more money when you control your greed.
Always take your profit too soon, the Second Axiom says. Why âtoo soonâ? What does that puzzling little phrase mean? It refers to the need to cash out before a set of winning events has reached its peak. Donât ever try to squeeze the last possible dollar from a set. It seldom works. Donât worry about the possibility that the set still has a long way to go â the possibility of regret. Donât fear regret. Since you canât see the peak, you must assume it is close rather than far. Take your profit and get out.
Carrying out the precept of the Second Axiom seems to be extraordinarily difficult for some. The main difficulty may be the fear of regret. This fear was Harryâs worst enemy and may continue to be. Harry is not alone.
The fear is particularly common and particularly intense around the stock market. âNever check the price of a stock youâve sold,â says one of Wall Streetâs ancient teachings. The admonition isnât designed to help you make money but simply to protect you from weeping fits. The âleft-behind blues,â as Streeters call the malady, is felt to be among the most painful of all ailments stock speculators must contend with.
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guys this second major axiom is sooo important i encourage you to read it and then discuss it. Let it sink in because greed will kill you as a trader. I know it is long but it is well worth it!!!
If we can master our emotions we will be a huge step closer to being a professional trader who is consistantly profitable.
Yeah definitely. Once a trade goes your way, i wouldnât hesitate to take profits if i donât see any reason the trade should extend. Iâve had many an opportunity to come out in profit but held onto the trade too long only to have it break-even or even worse.
Keep moving your stop loss postive. As soon as the trade is postive either move the stop loss to postive or at least break even. This one little thing has really helped my trading. Itâs turned my last two weeks record into only break even or postive as opposed to 6/4 win loss. It really helps the bottom line.
Yeah definitely. Once a trade goes your way, i wouldnât hesitate to take profits if i donât see any reason the trade should extend. Iâve had many an opportunity to come out in profit but held onto the trade too long only to have it break-even or even worse.
another idea is to close half your position at break even which creates a risk free trade. Sometiems it feels like taking your profit to soon but in the long run the limited risk will improve your bottom line even sometimes you will see the price moving in your favor. after that you can trail a stoploss for me I like to trail at significant technical areas rather than a fixed 20 pips or something but everybodys plan is different
thanks, john
You mean by break even the amount of pips your stop loss was right? If you risked twenty youâd close half at +20? Cause I mean by break even, actually break even, the 0 point where if it comes back the trade will close at 0 and not lose any pips but not make any.
I usually just set the SL to breakeven 0 as soon as I can, if price is giving me reason to believe there wonât be a good move in my direction. If I think their may be a good move Iâll wait and reset to 0 when price has moved away from 0 significantly enough where I think a quick spike wonât stop me out and then move back my way.
If I think the trade has potential to keep going good, Iâll leave the SL at 0 to give the trade breathing room and ride it for all itâs worth. Usually I chicken out a bit and just keep resetting postive.
You read the Ed Ponsi book too?
Hey Johnny, i just noticed you changed your profile picture. I think thatâs much better than some dog running on around on a lawn. 
Johnny, thanks for bringing these axioms to the light of day! I read the whole pdf twice, and it really changed my viewpoint on things.
thanks for sharing this johnny
thanks guys im glad it has helped so far. i see some interest so i guess this means i need to haul up another axiom
Hello friends⌠I found the discusssion is going very good
on about the risk management. Here I got some good text about the Risk management from yahoo finance which I want to share with you peopleâŚ
âTrade like a technical analyst. Understanding the fundamentals behind an investment also requires understanding the technical analysis method. When your fundamental and technical signals point to the same direction, you have a good chance to have a successful trade, especially with good money management skills. Use simple support and resistance technical analysis, Fibonacci Retracement and reversal days. Be disciplined. Create a position and understand your reasons for having that position, and establish stop loss and profit taking levels. Discipline includes hitting your stops and not following the temptation to stay with a losing position that has gone through your stop/loss level. When you buy, buy high. When you sell, sell higher. Similarly, when you sell, sell low. When you buy, buy lower. Rule of thumb: In a bull market, be long or neutral - in a bear market, be short or neutral. If you forget this rule and trade against the trend, you will usually cause yourself to suffer psychological worries, and frequently, losses. And never add to a losing position. On Easy-Forex the trader can change their trade orders as many times as they wish free of charge, either as a stop loss or as a take profit. The trader can also close the trade manually without a stop loss or profit take order being hit. Many successful traders set their stop loss price beyond the rate at which they made the trade so that the worst that can happen is that they get stopped out and make a profit.â