The Trader's Edge

Discussion in 'Trading' started by IndexSwing, Mar 21, 2008.

  1. As traders we all have an edge, although we may not realize or utilize it.

    1) The option to do nothing: As traders we have the luxury of being able to sit on the sidelines as long as we wish and wait for the perfect opportunity to present itself.

    2) The option to cut losses: We all have the option to use a stop loss and cut losses when small, thereby never exposing ourselves to the possibility of a large loss.

    3) The option to hold winners: We have the option to hang on to winning positions and to experience the occasional windfall profit.

    So, why do so many traders fail? Because human nature flies in the face of what is required to be a successful trader. Instead of waiting for the perfect opportunity we crave action and enter the market under less than ideal conditions. When we have a loosing position we are tempted to hold it because "surely this move is only temporary and the market will move my way." When we are in a winning position we feel the need to get out and lock inn a profit. If you are like most people in order to win in trading you must learn to do the opposite of what feels right.