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Posted: Sep 5 2007, 07:47 PM
King of Activist
Group: Admin Mod
Member No.: 3
Joined: 22-January 05
This is for those who are trigger happy, as it will possibly improve your performance by up to 50% a year.
Don't worry, I am not trying to sell you anything: no software cost, no subscription payment, no course fee. What I am referring to, is the way a trader selects his trade.
Even if the trader will to follow the stop and position sizing strategy strictly, risking only 1 % of his trading capital each time, a poorly selected trade which stops him out will cost him 1% of his trading capital. Looking at it from other direction, skipping a trade that does not fit all his entry conditions that ensure high probability of success, will probably save him 1%. This will add up to about 50% a year if he just skip 1 of these trades each week.
Now imagine if he risk more than 1 %; and imagine if the stop and position sizing strategy is not followed strictly.
What I am saying here are:
1. Capital preservation is the the key to survival in trading.
2. Only take position when you are satisfied with the old of winning.
3. Not taking a position at all is also a way to survive the market.
4. Don't worry about any missed opportunities. The market will always be there, it will out live all of us.