Hello I'm new to trading and gave been reading some good books. But in the same book (market wizards) Micheal Marcus said it is important to ride your winning trades In the next chapter Bruce Kovner (who was taught by Marcus) said the most important thing about trading for new traders is risk management. Having a set goal to get in and out of the trade before going in the trade. Then how do you expect to ride your winings? Ex: Buying citi @17.60 with a predertimed .10 cent raise. Do you get out when you hit your target? What about riding your wins?
IMO, as a newbie YOU learn how to take lossers fast and protect your capital. after 3-5 years, you will still be around because you protected your capital, and sure enough you will start to understand HOW to let your winners run. By year 7 or 8, you actually do let your winners run, no joke. (this was my experience. good luck)
Some feel, it is better to have a predetermined target amount, and exit trade when reached, otherwise, without a predetermined exit, you could be up 2, 3 points one day... and ride it all the way down again to zero or be in the hole.... all because you were "letting it ride" Also, new traders tend to cut their winners short, and let their losers ride.
shit thats exaclty whats happening to me, when do I cut losses? How do I know the market is just trying to shake me out and then ride all the way up:eek:
Use the chart and the rules from your trading plan to determine that. You dont need to be right more than 50% of the time in order to make money in this.... Here, read this old thread of mine, in it I briefly talk about money management and how important it is to stay alive...... http://www.elitetrader.com/vb/showthread.php?s=&threadid=52060&highlight=brand+new+traders+read+this
I would listen to lilduckling as he is one of the better posters here. I know I'm going to read the thread he mentioned. Also, learn some basic TA skills like how to read/draw charts and trendlines and how to recognize when a chart looks healthy or broken. To help with that I strongly suggest you read a couple of books by a lady named Toni Turner. I've read A Beginner's Guide to Short Term Trading and A Beginner's Guide to Day Trading Online a few times each. I found them just tremendously helpful. She took concepts I struggled with in the past and made them very understandable. Best of luck. Ansare