Many traders focus on managing trade entries and exits, seeking alpha. Most traders learn the hard way after having trouble with pressure, impulses, and ego force them not to execute their trading plan. Risk management generally is learned last, after discovering the impact that lost capital can have on confidence.
When a trader enters the market, any following price movement is based on market participants’ collective actions not any individual’s own opinions, hopes, and beliefs. While a trader can manage a trade via position size and exit strategies, he can not determine whether his stop loss or profit level is hit. A trader is at the market’s mercy to choose the future of each of their trades.
With a price action strategy, the trader’s decision is made up through the current price movement.
Risk management, a successful trading system, determination, self-control, and ambition are the best friends of a trader. Here are the biggest threats to a trader…
A stop loss is a weapon that you need to use to prevent a small loss from moving into a major loss. This may be your most important element in every trade, as big losses can drive an unsuccessful trading career.
Profitable trading does not involve opinions, predictions or even great stock tips. Successful trading is all about statistics, making more profit on good trades than you risk on unprofitable trades. Trading without knowing basic metrics induces in your system arbitrariness and chance. Knowing how to make the metrics work for your system will shift everythingContinue reading “Trading Metrics: Your Key to Profitability”