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Hi Brent
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> From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Gen: Help understand statment.
> Date: Thursday, August 06, 1998 2:07 PM
>
> RT's,
>
>
> Brent
>
> I'm of the opinion that there is actually a TRADING SECRET used by the
> best traders in the world. I think they all share a common....uncanny
>ability. They don't feel secure about there ability to complete
>winning trades. They don't really know how to make money.
> Their ability is their superb ability to NOT LOSE money. ... (snip)
I partially agree with the good DR. The difference between successful
traders and others is the ability not to lose. I disagree that this secret
lies in successfully calculating the risk reward of a trade. There is a
world of difference between the two ideas.
When I put on a trade, I do so because I believe the odds are in my favour.
I know where I want to be out because, at that point, my interpretation
of the mkt's future price action is wrong; I have also planned my exits
if the market goes my way.
But here is the point - all of the above matters.....
...........not a wit if the market does not do what my scenarios says it
should. At that point I exit the position as best I can. The POP said
it much better - when you put on a trade assume a trade is
wrong and unless the market proves the trade right, you exit.
Most traders take the opposite view - place the stop and let the mkt
prove the trade wrong.
Does early exit mean the market would not have stopped me out and have
gone my way? Yes. Sometimes I do climb back on board though not at
so advantageous a price as the original entry; sometimes I just miss the
move. The trade off to missing a move is you keep most losses very,
very small.
For me missing a move doesn't matter - my main concern is to protect my
capital. If I limit my losses, then I know it is only a matter of time
before I make my profit target for the year.
regards
ray
R Barros
101/25 Market Street
Sydney NSW 2000
Australia
Voice: 61 2 92673470
Fax: 61 2 92673478
E-Mail: rbarros@xxxxxxxxxxxxxxxxxx
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