Trading Psychology

Posted September 10th, 2022 by Tony. Comments Off on Trading Psychology.

Theorem. If you randomly enter the position on a particular stock, then with a large number of transactions a trader will be at the origin Gross (excluding spread and slippage). More details about the theorem. Let's say you get in a position to stop 10 points and take-profit of 30 points. This means that if a fixed position size (number of shares in all transactions) and a random choice of the direction input (long or short) after a series of trades you will stay at zero Gross (ie, on each of your profitable trade in 30 items, you will receive 3 losing 10 points). This conclusion – one of the main keys to successful trading. Learn how to not lose money.

Author Edwin Lefevre 'Memories Stock Operator 'came to this conclusion after his bankruptcy. George Soros and Warren Buffett also say this: "The most important thing on the market – not to lose money." Think for yourself, why trade with flip coin is more profitable because they do not lose money than 95% of traders who close their account with the net during the first year of trading? Reply – psychology. More precisely – not enforce strict trade regulations, lack of Systems and Discipline. "Intuitive" a trader can make money for some time, it is a fact. For even more opinions, read materials from David Green. But he has no stability, because it has no clear rules that he follows. Most traders lose in the end because they do not cut losses quickly and fixed income. Therefore, your mindset should be 180 degrees different from the crowd.

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