“I’m a
breakout trader, and I’ll tell you, over time I have had to learn over and over
again to resist the temptation: “This thing is going to go up, I need to get in
before it breaks out of this pattern.” - Peter Brandt
Facing the realities of the markets successfully is a must for anyone who
wants to enjoy permanent success in the market. When our nature and mindset
blend with what it takes to be a successful trader, the “challenges” are seen
as normality. The “normality” is then seen as a real blessing.
In the past, few people were fortunate to start enjoying success as soon
as they began their trading career. Many people had to grapple with the markets
before they started to enjoy success. During the time, they learned hard
lessons.* You too can begin to trade like the pro when you adapt your trading
approaches to suit that of the pro. If you ignore the facts, then I’m sorry for
you.
Here are specific suggestions. These suggestions came as a result of
decades of studies of the realities of the markets, and they’ll definitely help
you.
1. You can’t
guarantee what the markets might do next. You just need to trade what you
currently see in the charts. Success isn’t about accurate prediction of price
developments; it’s all about risk and money management. A gambler that trades
with 95% accuracy can end up ruining her/his portfolio. A good risk manager can
end up making money with only 40% a or far less.
2. If a market is
trendless (in an equilibrium phase) and there is no clear direction on it,
please don’t trade it unless you’re a scalper.
3. Veterans of the
markets agree that it pays to follow the trend. Don’t go against the line of
the least resistance.
4. When the
dominant bias is northward, you can increase you odds of success when you trade
only ‘buy’ signals and ignore ‘sell’ signals. Reverse the logic for a scenario
when the dominant bias is southward.
5. You’ll do
yourself a great favor if you can learn from the generals of the markets and
follow their trading principles and advice.
6. Your trading
method must fit your personality. If you’re always busy with a good job outside
the trading world, an intraday method can’t pay you. If you’re naturally
impatient, a position trading method can’t pay you. Your performances improve
only when you use a strategy that agrees with your psychology.
7. When you’re
faithful to your positive expectancy trading method, you don’t make a mistake
if you lose. Mistakes are made only when you betray your trading rules, even if
the betrayal results in gains. The recent positive results shouldn’t make you
overconfident; neither should you become too afraid to trade the next setup
owing to the recent negative trade.
8. Effective risk
control method and optimal position sizing techniques will ensure your
everlasting victory as a speculator. This is your life insurance in the
markets. Risk the same amount of money on each trade, and keep the risk very
small so that you’ll remain indifferent to the outcome of an individual trade.
An optimal stop, regardless of its demerits, would end up serving your best interest.
9. Open you orders
according to the winning principles that give you an edge, not according to
your irrational emotions.
You’d want to agree with me: We don’t know what the markets might do next
but we can be victorious, irrespective of what the markets do. One wise author
of a trading book responded to a question. He said he didn’t know which
direction the next significant movement would follow, but he could survive any
adverse movement or make nice profits from favorable movement. According to
him, No-one knows when the next storm is coming, but we can take measures and
build a ship that can withstand the storm. What more? The experience can even
be satisfactory.
Always bear this truth in mind. The markets offer you financial freedom,
and numerous traders have already attained it.
Ultimately, you can become an affluent trader.
This piece is ended with the quote below:
“I’ve
developed every type of system, fast and slow, done well with most, badly with
a few, but in the end, I prefer trading the trend.” – Perry Kaufman
*There are many ways to start enjoying quick success in the markets, but
that would be discussed in another article.
Source: www.tallinex.com
Learn from the Generals of the Markets: Market Generals
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