So, yesterday I was re-reading the Stock Market Wizards book, specially the Steven Cohen interview, and I found a piece of information that deeply caught my attention: Mr. Schwager Question: When you put on a trade and it goes against you, how do you decide when youâre wrong? (The question actually relates to him and his traders)" Mr. Cohen Answer: âThis is not a perfect game. I compile statistics on my traders. My best trader makes money only 63% of the time. Most traders make money only in the 50 to 55 percent range. That means youâre going to be wrong a lot. If thatâs the case, you better make sure your losses are as small as they can be, and that your winners are bigger" It is simply amazing that a guy with a track record of + ~40% anually after 50% of perfomance fees said something like this. He is either bluffing or money mangement is really what makes the difference between the tiny percentage of sucesfull traders and the rest. Since it is suposedly very hard to foretell the future, even for the legends, it is how you handle the winning and the losing positions that is the determinant factor of your bottom line. I like this theory.