Hi Everybody,
As I suspected, yesterdays was a lot harder than the last few days. But then a hard day was only to be expected, as I outlined a few days ago in my post on the Cyclical Nature of Trading. But today I would like to look at why it is so important to keep your losses small .
The 3min YM was a good example of this, as there were profitable trades as well as losses (small triangles) yesterday. But I just wanted to remind you all that the trick is keeping the losses small. Even with two losses, at -1R each, were more than made up for by just one profit later in the day at +3R (ignoring slippage and commission).
This is the trick to successful trading and the real Holy Grail, it is not about being right, or being able to predict the future, it is all about risk control and keeping your losses small. Amateur traders never seem to fully understand this. But you have to know and then accept this if you are ever to make the step to a successful and professional trader....
Thanks, Steve
As I suspected, yesterdays was a lot harder than the last few days. But then a hard day was only to be expected, as I outlined a few days ago in my post on the Cyclical Nature of Trading. But today I would like to look at why it is so important to keep your losses small .
The 3min YM was a good example of this, as there were profitable trades as well as losses (small triangles) yesterday. But I just wanted to remind you all that the trick is keeping the losses small. Even with two losses, at -1R each, were more than made up for by just one profit later in the day at +3R (ignoring slippage and commission).
This is the trick to successful trading and the real Holy Grail, it is not about being right, or being able to predict the future, it is all about risk control and keeping your losses small. Amateur traders never seem to fully understand this. But you have to know and then accept this if you are ever to make the step to a successful and professional trader....
Thanks, Steve
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