One must also get rid of the miths: 1) A good trading system is a simple trading system; 2) Trades must have "Take profit:Stoploss" ratio greater than 2:1 (usually wrongly called risk-reward ratio;
i completely agree with this assessment, but i would add: keep a good record. log each entry and exit, why you made the trade. looking back over you logbook helps you learn from your mistakes. i analyze each trade once it's over to determine what i did right or wrong.
and some traders routiney make a living by pounding out many trades where there "reward" (at least primary and secondary targets ) is LESS than the risk. again, it's all about positive expectancy an 80% winner with a 10 pt stop, 6 pt first target 8 pt second target, and 3rd target a runner with stop moved to entry is also a winning strategy.
That's odd, now that my capital has increased Im having problem with liquidity. Found it much easier to trade with lesser # of shares.
you gotta trade what u can that is one reason many people managing hyooge amounts of money can't beat the market (although I doubt you are there yet) . you can't beat the market, when u ARE the market. peter lynch talked about that iirc. personally, i trade futures (i invest in stocks, but don't trade them as much) and there is PLENTY of liquidity here, if u want to come on over.
ePandit, I am a beginning trader with 2 years real trading experience. I have a positive expectancy edge, that I totally believe in. I have pretty good risk management controls. I have plenty of capital. I have a good trade plan & detailed diary. But I have FEAR of losing money, being wrong, missing out & leaving money on the table etc. I am picking these off one by one by having strict entry & exit rules so I don't think I just act. Now its just down to pushing those fear boundaries every trading session. IMHO pro traders can control their fears and just do what it takes. Cheers J
Perhaps: 1) first you learn how to lose money 2) then you learn how not to lose money 3) then you learn how to make other traders lose money 4) ...
I'm sure other great examples exist, but a recent addition is Alexander Elders Entries & Exits - found it very helpful to read the traders thoughts before and after the trade entry/exit, and then Elder's after-the-fact comments.
Absolutely! When I read quotes here on ET, I wonder if some of the best traders forget the stepwise progression to becoming successful. In their attempt to sumarise how they 'became' they often forget the difficult to explain psychology, money management, and instead focus on the newbie questions (which program, broker, stock etc). It does take years in any profession to reach expertise. I sometimes think that what I do as a physician must seem so trivially easy to patients, but the reality is that all that training and experience has become automatic. I know I could never be what I am now as a physician, without years of experience.