Be an Honest Trading Professional

TRADING TRUTH WILL ONLY LAST

‘I know from experience that, as a trading professional, whatever I do, say, or decide today would shape my career tomorrow.”

Hello:

There’s a widespread crisis of confidence in trading professionals, just like in other walks of life. The world of trading is full of different types of careers, but confidence in trading pros is declining. Deceptive and crafty marketers have advanced from bad to worse. You might acquire a highly praised customized indicator, either free or at a price, only to see that it has extremely low hit rate. Yet the marketer showed you numerous good examples when persuading you to acquire it (only a highly disciplined and patient trader who can endure lasting losing streaks and ride a few winners to victory can survive with that kind of poor, but highly praised indicator). After a novice has fallen a victim of dishonest trading professionals many times, he or she would decide never to believe any so called pros again.

Why would a professional deceive people in the first place? A professional may try to capitalize on people’s ignorance of the mechanics of the financial markets; giving them poor training, making them believe that a piece of trading software is a Holy Grail or giving an impression that the markets bring extremely high returns within the shortest possible time, creating impression that the markets can be predicted, falsifying of trading results, or showing/mentioning only profits in analyses or examples (if one can’t mention any loss, then no sincere trader is interested in hearing/seeing one’s profits). Someone who calls himself a professional may find it difficult to tell people the truth about trading because of greedy expectations, determination to succeed at all costs (even if it involves confidence tricks), scarcity of honest role models (for he was also probably lured into trading by crooks), and practices that are inconsistent with noble trading principles. Many people have confirmed some highly ‘marketed’ trading experts as not virtuous, and they don’t see why they should be so themselves.

Many traders today believe that being honest in one’s profession may put one at a disadvantage. But you might do well to ask yourself this question: What’s more valuable, attainment of instant gratification or attainment of long-term benefits of honesty and transparency, including respect? Lies would soon be found out and everything would come down crashing. Yes, the short-term rewards of telling lies to people about trading pale into insignificance if compared to the long-term benefits of being honest. Are you a coach or an analyst? Are you a marketer or a trading signals provider? Please set a good example for your clientele by embracing integrity. Explain to them how you’ve benefited from knowing the truth about trading, and embracing it. When beginners see their mentors walking in the part of integrity, they’re more likely to adopt a trustworthy course themselves.

The truth about trading is that there’s no Golden Goose trading system, whereas marketers and coaches praise their products and seminars as the ‘almighty solution.’ The markets aren’t predictable; yet you can survive on them. Given the significant percentage of the traders that lose money by trying to predict the markets, the notion that the markets can be predicted is intellectually unsatisfactory. The truth also entails that there’s no short-cuts to success – no easy money. Risk and money management must be taken serious; otherwise any trading methodology is doomed. Any trading system pales into insignificance if compared to the value of survival measures. You need to limit your losses when you’re losing and make more money whenever the market is favorable to you. Success is possible, but you’d need to put forth real effort to attain it. Trading is like licking honey off a thorn. The only way you can short-cut the usually long process is to find a mentor who will lead you through the right steps. It will still take time and effort on your part, but you will arrive at your goal a lot sooner.

Unlike self-applauding professionals who sometime falsify trading results to fleece people, there are experts who mention their exploits and failures on the markets. These commendable experts reveal the trading truth, even when doing so is unflattering – as telling people what is right rather than what they want to hear. Such candor contrasts sharply with varnished, exaggerated trading hints and results from deceptive experts, who’d refuse to record or mention anything that may tamper with their inordinate greed and egocentric motives (which requires a considerable amount of criminal energy). It’s nice that some professionals chose to follow a trustworthy course. They speak the truth about trading. They mix the bitter truth with words of hope, without thinking of scaring people. They avoid doing things that aren’t in the interest of their potential and exiting clients, and they don’t think it’s proper to reap where they’ve not sown. There are honest professional everywhere - certain ones have earned reputation for being dependable. Yes many traders are trying to tell the truth about trading, and some pros have noble principles and they stick to them.

Although some people feel that poverty makes an individual exempt from the need to be honest, the assumption is not true. It’s a human tendency to give noble reasons for selfish actions; nonetheless, no evil would be justified on the ground of expediency. Many people will agree that the trading world would be much better if more trading professionals were honest. Being honest may make you appear like an idiot in the first place, but your reward is on the way. Please think of the time when many people can say to you: ‘We like you because you haven’t tried to deceive us.” No-one should be afraid to continue in the course of integrity. If you’re new to trading, please make a pivotal decision to be an honest professional.

Trust is like a paycheck – it must be earned. It gives me true joy and peace of mind to know that I’m not lying about trading or my trading results.

PS: Why do I find it easy to write articles? You see, for those who love the markets as much as I do, writing articles is easy. I end this article with the quote below:

“In this job there’s the disadvantage that everybody presumes everything has to be serious. Nothing is further from the truth. Trading the markets can be a long-term endeavor only if one mixes seriousness with humor, if it’s true that someone who’s intellectually clever also needs to have a sense humor.” – Emilio Tomasini

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Senior Analyst

FX Instructor, LLC

Email: amustapha@fxinstructor.com

Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

Nice trading tips are available at: www.ituglobalforex.com

And my past articles are also available at: www.ituglobalforex.blogspot.com

Yahoo! Messenger ID: saazalmu

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Mid-week Trading Update (September 8, 2010)

“Although anyone can randomly make a profit by sheer luck, in reality, making consistent profits from the markets isn’t a trivial task. It requires level-headed professional behavior executing a reliable trading system with profitable expectation.” – Mark Jurik
Hello:

This is an update on some of the movements on the markets and what I’m doing about them, plus our losses and profits. The analyses are based on daily charts, looking at the Big Picture, though my entries are on a smaller timeframe. My preferred leverage is 1:100 and our position size is 0.01 lots for each $1000. My maximum drawdown in a week is 3% (worst case scenario). I use the Price Behavior rules for strategic decisions and customized indicators for tactical entries. I open primary positions without predetermined exit target in mind, riding the trend for as long as it continues. The value of patience will forever be emphasized. As long as we stick to our rules and keep our risk low, we’re immune to fear.

You need to be humble enough to accept reality while trading; your ego isn’t your amigo. There are no absolutes in trading. Nothing is ever guaranteed, and since we’re all at the mercy of the markets, stop losses should be set, at least as far as this strategy is concerned. If a system has 60% probability, it mayn’t survive the markets if the trading risk is too large. Who knows if the trader would get 40% losing trades first before getting the 60% winning trades? However would the portfolio still be existing when the winning trades show up?


AUDUSD
Primary trend: Bullish
A sell signals is possible at 0.9310, a price at which it would be clear that the market is overbought and a bearish reversal is highly probable.
Order: Sell Limit
Entry date: September 6, 2010
Entry price: 0.9310
Initial stop: 0.9460
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Pending
Profit/loss: N/A
Percentage growth: N/A


NZDUSD
Primary trend: Bullish
The Buy Limit order I set last week is now invalid and the order has been cancelled. The bulls are now reigning though it looks like a bearish correction or reversal might take place very soon. I’ll enter a at a good resistance (preferably 0.7300)
Order: Buy Limit
Entry date: September 1, 2010
Entry price: 0.6940
Initial stop: 0.6790
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Cancelled
Profit/loss: N/A
Percentage growth: N/A

EURCAD
Primary trend: Bearish
I need to wait until this cross reaches an important level before I set any order. There’s no need to be trading day in day out with the hope of getting paid each day (though we’re used to being paid on daily or weekly or monthly basis). The market is different. We need to know that the market isn’t a remote Santa Claus that throws us dollars everyday.


EURAUD
Primary trend: Bearish
My order on this instrument was a failure. The EUR is too weak against the AUD. One might be tempted to join the bearish move, but it’s now dangerous to join since one didn’t start with the beginning of the trend. A bullish correction is likely anytime because the market is already in oversold region. I’ll try to put another Buy Limit order around a strong support.
Order: Buy Limit
Entry date: September 1, 2010
Entry price: 1.4090
Initial stop: 1.3840
Current stop: N/A
Exit price: 1.3840
Exit date: September 8, 2010
Status: Closed
Profit/loss: -250 pips
Percentage growth: -2.29%


EURNZD
Primary trend: Bearish
There was initial movement in my favor after the pending order on this cross was filled. I was able to break even before a bearish reversal against me. The next action is to try to pinpoint where the next turning point might be. The current price is clearly quoted below the Moving Average and the ADX –DI is now rising above the +DI, but the bearish momentum isn’t currently very strong.
Order: Buy Limit
Entry date: September 2, 2010
Entry price: 0.7840
Initial stop: 0.7690
Current stop: N/A
Exit price: 0.7840
Exit date: September 6, 2010
Status: Closed
Profit/loss: 0 (breakeven)
Percentage growth: N/A


AUDJPY
Primary trend: Bearish
I need to wait for a possible retracement to an area where I’d like to sell. Whatever decisions we make on the markets must have some statistical validity. I read about a statistics joke. An elderly prisoner has just been sentenced for a heinous crime and was returned to his cell. An inquisitive guard couldn’t wait to ask him about the outcome. Guard: “What did they sentence you to?” Prisoner: “I was given the choice of life or 100 years.” Guard: “And what did you choose?” Prisoner: “Well, life, obviously. Statistically speaking, that’s shorter.”
Order: Sell Limit
Entry date: September 6, 2010
Entry price: 78.15
Initial stop: 79.65
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Pending
Profit/loss: N/A
Percentage growth: N/A



Conclusion: The value of risk management is without question. “Less means more.” The less your risk, the more your chances of recovery form losses when the markets are favorable to your trading system. We don’t know when a trend will start or come to an end; we simply need to stick to our rules.


Please, I’d like to conclude with this quote:

(Traders) understand that their job as an active trader is not to wake up each morning and trade; it's to wake up each morning and apply our rules to look for low risk, high reward, and high probability trading opportunities. When we find them, we take rule-based action and trade. When we don't, we don't trade. – Sam Seiden (brackets mine)


Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Senior Analyst
FX Instructor, LLC
Email: amustapha@fxinstructor.com

Are you facing any challenges in trading? You might want to explore the secrets of markets wizards and duplicate their success. Get the secrets from my past articles at:
www.fxinstructor.com/blog/author/amustapha
www.fxinstructor.com/blog

Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

Nice trading tips are available at: www.ituglobalforex.com
And my past articles are also available at: www.ituglobalforex.blogspot.com

Yahoo! Messenger ID: saazalmu

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Mid-week Trading Update (September 8, 2010)

“Although anyone can randomly make a profit by sheer luck, in reality, making consistent profits from the markets isn’t a trivial task. It requires level-headed professional behavior executing a reliable trading system with profitable expectation.” – Mark Jurik
Hello:

This is an update on some of the movements on the markets and what I’m doing about them, plus our losses and profits. The analyses are based on daily charts, looking at the Big Picture, though my entries are on a smaller timeframe. My preferred leverage is 1:100 and our position size is 0.01 lots for each $1000. My maximum drawdown in a week is 3% (worst case scenario). I use the Price Behavior rules for strategic decisions and customized indicators for tactical entries. I open primary positions without predetermined exit target in mind, riding the trend for as long as it continues. The value of patience will forever be emphasized. As long as we stick to our rules and keep our risk low, we’re immune to fear.

You need to be humble enough to accept reality while trading; your ego isn’t your amigo. There are no absolutes in trading. Nothing is ever guaranteed, and since we’re all at the mercy of the markets, stop losses should be set, at least as far as this strategy is concerned. If a system has 60% probability, it mayn’t survive the markets if the trading risk is too large. Who knows if the trader would get 40% losing trades first before getting the 60% winning trades? However would the portfolio still be existing when the winning trades show up?


AUDUSD
Primary trend: Bullish
A sell signals is possible at 0.9310, a price at which it would be clear that the market is overbought and a bearish reversal is highly probable.
Order: Sell Limit
Entry date: September 6, 2010
Entry price: 0.9310
Initial stop: 0.9460
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Pending
Profit/loss: N/A
Percentage growth: N/A


NZDUSD
Primary trend: Bullish
The Buy Limit order I set last week is now invalid and the order has been cancelled. The bulls are now reigning though it looks like a bearish correction or reversal might take place very soon. I’ll enter a at a good resistance (preferably 0.7300)
Order: Buy Limit
Entry date: September 1, 2010
Entry price: 0.6940
Initial stop: 0.6790
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Cancelled
Profit/loss: N/A
Percentage growth: N/A

EURCAD
Primary trend: Bearish
I need to wait until this cross reaches an important level before I set any order. There’s no need to be trading day in day out with the hope of getting paid each day (though we’re used to being paid on daily or weekly or monthly basis). The market is different. We need to know that the market isn’t a remote Santa Claus that throws us dollars everyday.


EURAUD
Primary trend: Bearish
My order on this instrument was a failure. The EUR is too weak against the AUD. One might be tempted to join the bearish move, but it’s now dangerous to join since one didn’t start with the beginning of the trend. A bullish correction is likely anytime because the market is already in oversold region. I’ll try to put another Buy Limit order around a strong support.
Order: Buy Limit
Entry date: September 1, 2010
Entry price: 1.4090
Initial stop: 1.3840
Current stop: N/A
Exit price: 1.3840
Exit date: September 8, 2010
Status: Closed
Profit/loss: -250 pips
Percentage growth: -2.29%


EURNZD
Primary trend: Bearish
There was initial movement in my favor after the pending order on this cross was filled. I was able to break even before a bearish reversal against me. The next action is to try to pinpoint where the next turning point might be. The current price is clearly quoted below the Moving Average and the ADX –DI is now rising above the +DI, but the bearish momentum isn’t currently very strong.
Order: Buy Limit
Entry date: September 2, 2010
Entry price: 0.7840
Initial stop: 0.7690
Current stop: N/A
Exit price: 0.7840
Exit date: September 6, 2010
Status: Closed
Profit/loss: 0 (breakeven)
Percentage growth: N/A


AUDJPY
Primary trend: Bearish
I need to wait for a possible retracement to an area where I’d like to sell. Whatever decisions we make on the markets must have some statistical validity. I read about a statistics joke. An elderly prisoner has just been sentenced for a heinous crime and was returned to his cell. An inquisitive guard couldn’t wait to ask him about the outcome. Guard: “What did they sentence you to?” Prisoner: “I was given the choice of life or 100 years.” Guard: “And what did you choose?” Prisoner: “Well, life, obviously. Statistically speaking, that’s shorter.”
Order: Sell Limit
Entry date: September 6, 2010
Entry price: 78.15
Initial stop: 79.65
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Pending
Profit/loss: N/A
Percentage growth: N/A



Conclusion: The value of risk management is without question. “Less means more.” The less your risk, the more your chances of recovery form losses when the markets are favorable to your trading system. We don’t know when a trend will start or come to an end; we simply need to stick to our rules.


Please, I’d like to conclude with this quote:

(Traders) understand that their job as an active trader is not to wake up each morning and trade; it's to wake up each morning and apply our rules to look for low risk, high reward, and high probability trading opportunities. When we find them, we take rule-based action and trade. When we don't, we don't trade. – Sam Seiden (brackets mine)


Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Senior Analyst
FX Instructor, LLC
Email: amustapha@fxinstructor.com

Are you facing any challenges in trading? You might want to explore the secrets of markets wizards and duplicate their success. Get the secrets from my past articles at:
www.fxinstructor.com/blog/author/amustapha
www.fxinstructor.com/blog

Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

Nice trading tips are available at: www.ituglobalforex.com
And my past articles are also available at: www.ituglobalforex.blogspot.com

Yahoo! Messenger ID: saazalmu

NB: There is risk of loss in trading, but it is possible to be a successful trader.

YOUR QUESTIONS ANSWERED

YOUR QUESTIONS ANSWERED

Hello:

Today I simply want to answer some questions sent to my email. All senders have gotten personal replies from me; only that I wanted to make some questions public, and so adding more details to the answers, for our mutual benefits. Only 7 questions are treated here. Here we go:

1. What are your trading beliefs? --- M. F.

Answer: My trading beliefs are based on my long-term observations of the Forex markets. I also made serious endeavors to study the trading strategies of successful traders, and I found what majority of them have in common. Most of their timeless principles have been mentioned in my past articles. On of them is “cut your losses short and let your profits run” (a golden rule). Traders keep on looking for magical trading systems that can make them right most of the time. Your success has nothing to do with what’s happening in China or Ghana; neither does it have anything to do with any forms of technical analyses whatsoever. The only purpose for possessing a trading system is simply to have reasons for entering a trade; it has nothing to do with your survival. No system on earth can survive without effective risk management, plus our long-term success has nothing to do with the accuracy of our entries, it lies in our exits. Let me remind you that Dr. Van K. Tharp forecasts that a sequence of 6 trades with a hit rate of 17% remain profitable, provided the 5 losses are limited to 5 x (-1R) = -5R, and the winning trade amounts to 10R. Conversely, I’d say that a sequence of 6 trades with a hit rate of 83% remains a losing strategy if the 5 profits are limited to 5 x (+1R) = +5R, and the losing trade amounts to -10R. This golden rule makes perfect rational and logical sense but our wrong mental biases always make us go against it, doing its exact opposite. This basic truth isn’t attractive to most traders who feel that right entries are what needed for survival on the markets. Yes experience is the best teacher.

2. I swear I’ll never believe any adverts again. I’ve lost up to $10,000 on the markets, and it was by following the advice and the trading systems of smart guys who have a lot of influence in the trading world. What makes you special? --- C. I.

Answer: I’ll repeat that trading success has nothing to do with any trading system under heaven. You don’t become successful by predicting the markets correctly. The markets aren’t predictable. As for me, there’s nothing special about me. I was a novice trader in the past (though I thought I knew what I was doing). I’m just a humble trader who’s trying to do the right things on the markets. I’m working hard to become a better trader. I’m also trying to make some traders benefit from my trading activities and beliefs. Popularity has nothing to do with skills on the markets, and so is education. Someone talking on a popular financial program may be having serious problem trading successfully on his own while an unknown trader may be making consistent profits in his own bedroom. The fact that nearly $10,000 was lost means that those guys or you didn’t take money management serious.

3. Why aren’t you afraid of the consequences of showing your losses alongside your profits? --- E. R.

Answer: Honesty will forever be the best policy. Being honest has nothing to do with the color of your skin or your nationality – it has to do with an individual. I don’t want anyone to tell me lies, and I don’t want to tell you lies either. We make mistakes in life, owing to our imperfect nature. In fact, most of us who do well are probably right less than half of the time. Yet many traders like to dwell on illusion (Illusions are something very pleasant, but the only disadvantage is that they tend to burst like a bubble). If we think we can dodge realities, realities will eventually face us. I’ve seen many market analysts who are too egocentric to admit their errors. We need to be humble and accept our limitations. Humility is the recipe for success. Those analysts want to prove to the world that they’re perfect. If a typical analyst says that he expects the EURUSD to get to a price, he’ll never mention that again in a subsequent article if the forecast fails. He’ll only make references to his past forecasts that have come to pass. Many an analyst will post charts that showcase their winning trades and mention their profits only. Some even announce bogus profits! To me, this is professional hypocrisy. Those analysts are indirectly adding to the problems of novice traders (who they’re supposed to help), by giving them impression that there’s a Holy Grail somewhere. In my future articles, I’ll be transparent - I’ll mention my profits and losses, plus how I survive in spite of this.

4. I have over two years of experience on the markets, yet I can’t do anything. I’m cowardly when it comes to trading executions on a live account. I could even pass water on my body if a trade goes against me. How can I trade like you? This I want to know. --- A. G.

Answer: You nearly made me laugh by what you just said. Your risk must be vey low in order not to pass water spontaneously when you’re trading. Besides, you need to demo-trade a strategy for at least two months in order to be sure it can survive the markets. If you’re still profitable after the demo practice, you should be confident that as long as you stick to your rules, you’ll be profitable. If you believe my trading ideas and you’re disciplined enough to follow them, perhaps you could trade like me. You could also read some of my past articles.

5. You are a long-term trader, but I don’t like to hold positions on a long-term basis. Don’t you have any short-term strategy at all? --- S. S.

Answer: Yes you’re right. I’m a long-term trader. I try to find potentially turning points on the markets – levels of demand and supply. I ride a trend until it reaches maturity. I don’t believe in taking 40 pips when the market can offer me 200 pips on a trade. I like to place trades and go and come back to check later. Nevertheless I’m constantly aware of the need to accommodate short-term traders who sit in front of their screens for several hours of the day. My long-term strategy shows results only on quarterly to yearly basis whereas there should be another one that shows results on monthly basis. To this end, our forex research group has developed a positive expectancy scalping strategy with good accuracy and nice risk-to-reward ratio. Trades are opened and closed within minutes. Unlike my swing cum position trading system, it works in all markets conditions unless there is too little movement. It’s being paper-traded by my trainees. Soon I’ll give you the details of this strategy in one of my future articles. It’s partly based on a theory of Mr. Stefan. Stefan Risse talks about the Chance-Risk-Profile (CPR) as the magic formula. Here, too, the risk (still the gap between the expected entry price and the first stop loss after position entry) is defined before the entry and the realistically expected profit put in relation to it. The requirement: The ratio between chance and risk (C/R) should be at least 2.5:1, otherwise the trade shouldn’t be entered. This means the end profit indeed amounts to 2.5 times the initial calculated risk. So anytime I’m online, I may be looking for a short-term entry as well

6. I wonder why I don’t see you in one of those trading rooms one Fridays. Why? --- N. Y.

Answer: Trading rooms are an excellent option when it comes to trading mentorship, but it seems I’m not prepared for one now. There are other ways by which my readers, trainees and clients can benefit from my trading activities. But I need to tell you that I can’t help admire the great value of a trading room, and you’ll soon see me in one.

7. When would you start giving your real-time trading signals? --- G. B.

Answer: Thanks for this question. My trading signals would soon be offered. The great purpose of offering trading signals is to make you survive the markets just like I do: doing the same risk management like me and managing open orders. We’re working towards this goal. Further enquiries could be forwarded to info@fxinstructor.com. Thanks.

PS: I’m so sorry I was able to take only 7 questions. Next Friday would feature an interesting explanation of an important topic – a real eye-opener. Meanwhile let me conclude the article today with this quote:

“As I have said many times before, trading is not really about making money, but instead it is all about capital preservation. Without money in the account, you can't trade. Always risk small percentages of your account and use decent risk to reward ratios which, in time, will provide you with a buffer to cover the losses that you will endure. Risk rewarding ratios are far more important in the longevity of a trading career than hit rates… trading is not about how you win, but how you lose. Lose small and win big is the idea and if you are disciplined enough, you can still make good money with as little as a 30% success rate. This is one of the only businesses in the world where we can get paid for being overall losers, but only if strict risk management principles are adhered to at all times.” --- Sam Evans

The Truth About Market Wizards

Sir/Madam:

My interest in market wizards has lead to a simple conclusion - a great trader isn’t necessarily smarter than we do, he just has an access to a colossal fund. Great traders also lose. Though they survive losing streaks, the only difference is the hug
eness of their accounts.

I heard of a rogue trader in Europe who lost close to 50 billion Euros, while I know a humble trader who manages $5000 successfully. Someone isn’t a wizard simply because he has access to a huge fund.

If someone makes 20% per annum on $1000, who would call him a great trader? But if he makes the same 20% on $10 billion per annum, why wouldn’t you call him a great trader? $2 billion is a great amount of money. If I had $1 million to play the markets, I could be very much comfortable if I’m making only 1% per month. But if I funded my account with $10, no-one would even take me serious
If I boasted of 50% per annum, unless it was 50% of $50 billion.


You see, great traders don’t necessarily double accounts to be called ‘’successful.’’ Although some of them risk too much of the funds they manage, and you know the possible consequences of that. For them, only a small percentage profit will make a big difference. But most traders don’t have a great amount of money. You might want to fund your account with $100 and make 10% - 20% on daily basis (if you’d been trained to be a suicide trader). So this is where frustration comes in; we want to trade with a small amount of money and live a big life. You wouldn’t appreciate 10% profit in 3 months if your account is small. Please let’s have a rethink!

Van K. Tharp declares: ‘’From my market research and other sources, I know how a number of ‘market wizard’ caliber traders function. They have good systems with positive expectancy. But those systems are not much different than the kind of systems the average person can get. The difference between making a fortune in the markets, as most of them have done, and average performance is simply one of position sizing. Great traders apply great position sizing to good systems and have the discipline to carry it out.’’

A hugely successful trader was reported as using mathematical models in making trading decisions. One would first think the models are his secret, but when I delved further, I saw that he usually uses 1:2 or 1:3 risk-to-reward on swing trades. Honestly, the good RRR is also part of his secret.

You can be great with any entry criteria you use – whether technical or fundamental or a combination of both. But all systems have losing streaks, whether temporary or protracted. So you need a good RRR

To conclude, we need to continue working and developing to have the real LUCK, (Labor Under Constant Knowledge).