Increasing the Odds of Success Trading is one profession where you often find yourself working against the odds. Not just anyone can walk in off the street and start making consistent profits. It takes practice, skill, and the proper mindset. Unless you take evasive action against adverse market forces, you may fall victim to overwhelming odds. But skilled traders know how to put the odds in their favor, and you can too. Here are some steps you can take to increase the odds of success. One skill you must learn is to carefully walk a tightrope between self-doubt and overconfidence. Trading brings out both feelings, and it is often difficult to find the right balance between these two extremes. You may be optimistic at first, but you'll soon find out that trading can be difficult. The markets are unpredictable and a winning streak can turn into a losing streak in the blink of an eye. It is easy to become disappointed and consumed with doubt. But it is vital to not become too pessimistic, otherwise you'll never be able to pick yourself up and try again. What usually happens, though, is that you become overly arrogant to protect your ego. You may try to psych yourself up and try to beat the odds. Thinking optimistically can be useful at times, but you must use your optimism effectively. Don't arrogantly think you know how to trade before you've built up the necessary skills. Don't take unnecessary risks and think that you can beat the markets with shear will. Persistence without the proper amount of skill will get you nowhere. You must study, practice, and learn in order to build up the necessary level of skill to trade consistently. Set learning goals, rather than performance goals. In other words, reward yourself for learning techniques at first, and when you're ready, you can set an overall profit goal. It's vital that you acknowledge your risks up front. Trading involves risk and you better learn to admit it. Traders try for the big profits, and they are ready to take the risk and the responsibility. However, the difference between the professionals and the amateurs is that risk is carefully managed. Since you're trying to capitalize on winning odds, it's vital for your survival to anticipate a string of losing trades. That means looking at the risk to reward ratio before entering a trade, making sure that you have a large enough account to take the risk, and if you don't, stand aside and wait for a trade you can take. Risk management is a trader's secret weapon, and you must use is to survive over the long haul. Finally, you must use reliable trading strategies. This is so much easier said than done. Obviously, you can't expect to profit if your trading strategy is flawed. But it is hard to know when it's flawed or just not working because of less than optimal market conditions for that strategy. All the trading books and experts warn, "Don't abandon a trading strategy prematurely." It's not wise to jump from strategy to strategy, but what's "prematurely"? Based on probability theory, even a winning strategy can produce a string of losers and a severe drawdown, so sticking with a sound strategy too long when it's not working is going to wipe out your trading account. So again, we're all walking a fine line. Perhaps the best you can do is decide how much of your trading capital you will risk on the strategy up front, and if you lose that predetermined stake, just move on. Trading is challenging and unless you are prepared, there are forces that put the odds against you. With the right mindset and proper risk control, however, you can move the odds in your favor, and achieve consistent profitability. Copyright © 2000-2003 Innerworth.com. All rights reserved -------------------------------- The last sentence is the "Holy Grail". With the right mindset and proper risk control, however, you can move the odds in your favor, and achieve consistent profitability. Chinook
I started playing both sides. I'm long now. I'll be very happy with 20-25 pips. Crude oil's trying to rally. Chinook
I have to run out to work now but i posted my trades in my journal. I'm playing both sides as well. I don't know which way she will break but it looks like I will be ready.
My shorts with tight stops got fried. I had three stops each a tick apart and the market turned away right after stopping my last position. I reshorted with some loss on the last shorts. At this time, I think we'll see some random walk. I can take my small profits on this last short or let it float hoping for a downside momentum...I'll let it float. Chinook
I can't believe that anyone cares what Snow said but his interview on Bloomberg corresponds to the spike in the Euro and cable. Anyone have any other info?
What did he say that was bullish for the EUR and GBP anyway? I can't find why the market is reacting like this. Not that I am complaining. I have the biggest long EUR position on that I've ever had in my life now.
There wasn't really anything USD negative. A while back every time he said the words "strong dollar policy" the euro would spike as if traders were saying "yeah, right" but I thought the market stopped caring what he said unless it was at a G-7 meeting.