I have read many an article stating the following. You do not make money when you enter a trade. You make money managing the trade. Even when the trade goes against you, how well you manage your exit will determine your losses. If you enter a trade and it goes against you immediately, nothing you can do about it. It happens. You might have read the signals wrong. An event triggered a price decline. You have to decide where is your ultimate loss point where you get out come hell or high water. That point is absolutely crucial and that is the point where most people fail!
4 Items make us fail at that point:
1. Emotions make us fail!!!! (It's going to turn, isn't it? Maybe, maybe not. At this stage you have become a gambler.)
2. Listening to other people make us fail!!! (You realize that they are in a losing trade also and do not want to feel alone right?)
3. Listening to the media make us fail!!! (These okes call tops and bottoms and only 1 out of every 100 get it right. You do realize that?)
4. Cashflow make us fail!!! (You have lost so much money, you can't afford to get out. You have to wait for it to make your money back. It can take a month or 10 years. You are stuck.)
A successful trader has a system that works 60% of the time and that 10% above the gambling point of 50/50 gives him the edge that makes him money.
Stoploss was mentioned. It's worth it's weight in gold!
