THE FOUR KEYS TO SUCCESSFUL TRADING

tomorrow

Money Management是每个新手都容易忽略的, 这个关于Money Management的文章和指导对我很有帮助, 作者有点罗嗦,为了尊重原著, 没有删改. 耐心看看, 比输掉很大本金要好.
There are four essential pieces to a trading mentality: timing, direction, money management and patience.Many novice traders only consider the first two of these building blocks ? timing and direction ? to be the real cornerstones of trading.However, let me take a minute to dispel some myths around them.Timing is wonderful when it works out. There's nothing quite like getting into a trade that starts making money the very first day. It feeds our ego to think that we were so smart to get in when we did. However, too many of those in a row have ruined more than one budding trader.The truth is, when a trader enters a trade at exactly the right moment, it's more a matter of statistical probability than smarts. If you enter enough trades, some are bound to hit right on the head. But constantly striving for such an entry is likely to prove more discouraging than enriching. Timing is not the holy grail of trading.What about market direction? How important is that? In the world of currency trading, it certainly has a place. After all, if you aren't trading in the same direction the currency is moving, you're going the wrong way!But in the long run, market direction becomes less important. Currencies change direction swiftly. So even if you start out with things going the wrong way, they could easily turn around to get you back to break even or actually make you a bit of money ? assuming you can hang on long enough. My point, however, is that market direction is too fickle to be considered a holy grail, too.So is there a holy grail of trading ? an absolutely foolproof way to rack up more winners than losers? I think so.In fact, I think I've found it.
You probably know a bit about my background. For years I was a losing trader, looking for anything that would get me a high percentage of profits. I was buying one system and setup after another, but not getting ahead.As my losses mounted, I decided I needed to step back to gain some perspective. Figure out what when wrong, where things went right.And one day, it struck me.There is a HOLY GRAIL in trading.It's not a system. It's not in the time of day that you trade, or in the currency pair that you follow. It's not in your guru, your data feed or your indicators. The holy grail of trading is money management. Please don't read further until you let that sink in. That is THE key to successful lifelong trading. STOP HERE. THINK HARD.Good money management will make you money, even in tough times. And it will save you tens of thousands, perhaps even hundreds of thousands of dollars if you reach the rank of successful trader.And it all boils down to this. You must take trades that have at least a 1-to-2 risk-to reward ratio. Of course, 1-to-3 (or higher) is even better.In options trading, that is easy to ascertain. If I stand to make 100% but limit myself to a 50% loss, then even if I am only 50/50 on my trade selection, I'm going to come out ahead.Think of it this way: If my risk capital is $500 and I double that once, I have $1,000. If I risk $500 on my next trade and it is a loser, I still have $750 left at the end of that trade.Keep risking only $500 until your account is up 300%. Once you have reached $2,000, you can double your risk capital to $1,000.If you ever fall below $2,000, just go back to risking $500 until you reach $2,000 again. Statistically, you will reach $2,000 at some point and (again, statistically) you will eventually have a winner. Based on a $1,000 risk position, a winner will take your account to$4,000. But you will only keep risking $1,000 per position. (Remember, a $1,000 risk position means you are only really risking 50%of that, or $500.)Boost your risk capital again when your account reaches $6,000.By only seeking to grow incrementally, always managing your risk, you can even go on a bad streak of 66% losing trades and still break even. Nobody wants to do that. But you better plan on it happening, because it will.As in football, even the best teams have to drop back and punt ? you will too. We did just this week when we unloaded our peso and yen positions. But keep your wins bigger than your losers and only take good risk/reward trades, and you will find your money compounding faster than you ever dreamed.But that brings us to our last bit of trading mentality for the day... patience.I often quote some of my favorite words from St. James, "Let patience have her perfect work."If you're in a rush to make money, you stand a very good chance of being disappointed. In fact, it's more likely you'll lose money.It reminds me of a gut-wrenching story a trading friend told me the other day. He was in a couple of positions overnight before an upcoming non-farm payroll report. Winning or losing hinged on what the report had to say ? and he didn't want to risk being knocked out of the trade by setting stop losses. Instead he figured he'd get up in the morning, then take profits or cut losses so he could be squared-up awaiting the big news. But when he woke up, he discovered there was a problem with his Internet connection. And unfortunately, he had a broker who only processed online orders... nothing over the phone. He had no laptop to go seek a wi-fi spot, and his Internet provider could not get out there to his house until after 11 a.m. ? well after the markets had opened.Of course, as these things go, the non-farm payroll report came out strongly against his positions. By the time he was able to get back online in the early afternoon, he had lost 60% of his account. He had fallen from $30,000 to $10,000 in just hours. He was so stunned,it was months before he could pull the trigger to try to rebuild. All because he bet big hoping for overnight riches.Trading is a fast way to lose money. But if you are careful, if you practice the Holy Grail of trading, patience will pay off in spades.

ppteam

hmmm, I think this is way too risky.
And this is not for beginners.

Beginners need to have a decent size account to trade small size, so they are allowed to have bigger margin for error as long as the BIG direction is right, I know talking is cheap.

dara

easy to talk.

Everyone knows patience is important, but greedy will drive you to trade.

bobcat

High Frequency Trading vs Patience, I think patience is the loser nowadays,
in both reward and risk!

tomorrow

老大们, 我想推崇的是money management part, 只看那点就可以了. 下次我要删改了枝杈再转贴. 哈哈.

ROOKIE2

abaqus

1# tomorrow


Nothing is better than this! Thanks,