«How many new traders succeed?» — Asks a potential trader from a group of battle-hardened experts. «Of those 40% who survive more than a year, only one or two per cent will learn to consistently make a profit» — meets the head of one of the major brokerage firms. «About five of the 100 — according to my observations,» — said a leading trader of large hedge fund. We Innerworth found that less than 25% hold out at least six months. It seems that many would agree with this: If you plan to do only trading, the probability against you. Here are some ways in which converts traders can avoid common mistakes and win probability.
Control of arrogance:
Must be an optimist. A pessimist will never accept the probability of success. But optimism must be used efficiently. Do not assume that you know how to trade, have not yet received the necessary skills. Analyze, practice, and learn. Set a goal to learn, but do not receive feedback. In other words, the first study methods, and only then can bet profit.
Recognize that you are playing for money, and limit the risk:
Brokers and other members of the investment community think that they humiliate traders, calling them «players», but experienced traders are easily recognized: «We play for money» — they say. But here there is the risk and it is better to admit. Traders are fighting for more profit and they are willing to take responsibility. However, the distinction between professionals and amateurs, whether in trading or gambling, is manifested in risk management. Since you are trying to make a profit on the probability of winning, it is vital for your survival expected series of losing trades. This means before entering into a transaction to consider the ratio of risk / profit, make sure you have a big enough expense to take risks, and if not, wait on the sidelines and wait for a deal that will take. Risk Management — this is the secret weapon trader.
Use a reliable trading strategies, and know when to change them:
It is much easier said than done. Obviously, you can not wait for profits, if your strategy is wrong. But you must know one’s weak, it does not work at all or only for sub-optimal market conditions for this strategy. All the books on trading and experts warn, «Do not refuse prematurely from a trading strategy. Not wise to jump from strategy to strategy, but what is «premature»? Based on the theory of probability, even a winning strategy may give a string of losses and a serious drawdown because too long operation strategy when it does not work, delete your account. Perhaps the best thing you can do — to determine how much capital you allot at risk for the basic strategy. Know the market conditions needed for the strategy and make sure that these conditions are present. However, there is no replacing the experience of trade, when to decide how long to adhere to the strategy, before withdrawing it.