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A trading position has only one reason to exist, and that is to make a profit. So why do most traders count more losses than profits? Most games have strict rules to define who is the winner and who was the loser. In trading, you don’t have such rules. Your score is your account.
If your account is so big that a total loss would cause problems in your lifestyle, you probably should trade a smaller account. People want to avoid the pain of a loss. Could you afford to lose $50,000? For most people, the answer is no. That would be a huge disaster.
Automated trading has several advantages. One is the fact that we can do back tests in a few minutes. The right position sizing is like spice in the soup. You wouldn’t throw a whole pound of salt into the soup. If you do, nobody is going to eat it, no matter what other ingredients you have used.
When I change something for my trading system, I am going through a whole series of tests to find out what works and why it works. There are so many entry signals, so how should you find the right one?
Often something works for a long time, but there will be some point in time where you need to face a crisis situation. And that is the time when it is hard to avoid fear.
If you have a big base rate, it is possible to improve the quality of your assumptions and that can help you to improve your results and get above average probabilities. How do you decide if something is a good or a bad choice?
I can’t even remember 20 things in a row. But your computer can do that with each and every price on the chart.
What looks like a perfect setup for one currency pair or one trading year might not be a good fit in other years or for other pairs.
Fear is the enemy of consistency. What if I lose it all? This is so much money. Shouldn’t I play it safe? It is necessary to define exactly what you want to do.
Once that is done, you can test it to get a result.
You can make profits. That is true, but you have no guarantee that you couldn’t also make a loss. You can do back tests in a few minutes with automated trading, but as a discretionary trader, you would never be able to do a few hundred or even a few thousand trades in a row.
If you can overcome your doubts and find the right kind of setting for your own needs, you might be able to become a happy trader. Stocks are rated in relation to the company management. If the manager does something stupid, the stock value might fall like a stone. You don’t have to believe me. You can find out if it works for you and compare your results to the ones you see in this video.
A big loss might cause you to manipulate your system or even close the whole account because of fear or other unpleasant emotions.