1. 1. Know your risk tolerance
You don't know what your risk should only after you have blown a few accounts. Pain will tell you.
2. Know your risk/return ratio
how can you know this if you don't have a track records and even with the track record the future is unknown
3. Know your entry
If you could know your entry would you take a losing trade?
4. Know your exits
Same as 3.
5. Follow your "If-then" syntax"
What works today may not work tomorrow
6. Trade your plan
Look at the above, can you really have a plan based on that?
Good questions Mingary.
Here are my responses:
1. LOL, the risk tolerance of a long-term investor will be much smaller than a day trader. This is what I'm getting at. Older folks who are investing their retirement will not be able to tolerate as much risk as a younger trader.
2. If you know your entries and exits (stops and limits), you DO know your risk/return. Only take trades that will give you a bigger return than you risk.
3 & 4. YES! You are going to have a ton of losing trades, but you can define how much you lose. If you lose 3 trades with -1% but win one trade with +4%, you have a net gain. This is a successful way to trade in the long term.
5. That's exactly right. But if you do the same thing over and over and you have incremental gains and small losses, this will profit in the long run. You aren't trying to get more winners than losers, you are trying to build a trading account.
6. This is the only way to have a plan.
You don't know what your risk should only after you have blown a few accounts. Pain will tell you.
2. Know your risk/return ratio
how can you know this if you don't have a track records and even with the track record the future is unknown
3. Know your entry
If you could know your entry would you take a losing trade?
4. Know your exits
Same as 3.
5. Follow your "If-then" syntax"
What works today may not work tomorrow
6. Trade your plan
Look at the above, can you really have a plan based on that?
Good questions Mingary.
Here are my responses:
1. LOL, the risk tolerance of a long-term investor will be much smaller than a day trader. This is what I'm getting at. Older folks who are investing their retirement will not be able to tolerate as much risk as a younger trader.
2. If you know your entries and exits (stops and limits), you DO know your risk/return. Only take trades that will give you a bigger return than you risk.
3 & 4. YES! You are going to have a ton of losing trades, but you can define how much you lose. If you lose 3 trades with -1% but win one trade with +4%, you have a net gain. This is a successful way to trade in the long term.
5. That's exactly right. But if you do the same thing over and over and you have incremental gains and small losses, this will profit in the long run. You aren't trying to get more winners than losers, you are trying to build a trading account.
6. This is the only way to have a plan.