“We succeed in enterprises which demand the positive qualities we possess, but we excel in those which we can also use our defects” Alexis De Tocqueville
Be sure to give yourself a competitive edge when you set out to trade these markets and protect your ass to the downside. Lets start with competitive edge. You don’t need 80% profitable trades to make money. In fact, 80% can make you rich. I’m just no suggesting that you don’t set 80% as a goal. Just don’t expect it from the start. Most of us don’t trade at that level and plenty of people who make their living trading trade with success rate far less than 80%. You can make money with 30% profitable trades if you maximize your profits and minimize your losses.
Stay focused. What is important – no, critical is to give yourself a competitive advantage. Don’t kid yourself, trading is a highly competitive venture and there are a bunch of very good and well funded people out there ready to take your money very time you slip up. Make sure you entries move in your direction more than against you, protect your account from losses when the market does move against you immediately and establish protective stops to capture your gains. None of this is ego driven. If a security moves against you – sell it. There are plenty of other securities to replace it that will give you better odds. One of the keys to success in this venture is maintaining a list of alternative securities from which to select when you remove one from your portfolio. It makes no difference how you you select your alternatives – that is up to your view of the market. But you must maintain a selected list of possible entries. Filter and prioritize them so when you need one it will be available at a moment notice.
I also believe that it is more important to control your exit than your entry. Both are important and will build your bottom line but being causal with your exit strategy is a recipe for disaster. Money lost is harder to replace. I’m not recommending this but you can make your entries randomly and still make money if you manage your stop loss and exit strategy properly. We’ll talk more about all this as we go.
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