Game of Probability
It feels good to be right but we can't be right all the time. Sometimes we are wrong. We bought a stock and it did not move as expected.
Trading is a game of probability. There is no certainty. We do not know what the outcome of a trade. When we trade we are operating in an environment of uncertainty. This is the reality of trading.
What can we do then to make money in the stock market?
1. We need to manage and control our risk. We need to have an exit strategy to cut loss when we are wrong and to take profit when we are right, and, we should not risk too much of our capital.
2. We need to have a method that gives us an edge. We need to test our method to make sure it is right most of the time and wrong only sometimes. There are so many methods. Some traders rely on chart patterns, some on technical indicators and some combine both, some rely on instinct, some use all sort of fancy methods etc...to identify a trading opportunity and make their trade decision. Whatever methods you use it will not work all the time. Remember trading is a game of probability.
3. We need to monitor and evaluate our performance.
4. We need to write the rules how we manage and control our risk and how we define and identify a trading opportunity with our method.
5. Most importantly we need to have the discipline to follow our rules.
Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.
Trading is a game of probability. There is no certainty. We do not know what the outcome of a trade. When we trade we are operating in an environment of uncertainty. This is the reality of trading.
What can we do then to make money in the stock market?
1. We need to manage and control our risk. We need to have an exit strategy to cut loss when we are wrong and to take profit when we are right, and, we should not risk too much of our capital.
2. We need to have a method that gives us an edge. We need to test our method to make sure it is right most of the time and wrong only sometimes. There are so many methods. Some traders rely on chart patterns, some on technical indicators and some combine both, some rely on instinct, some use all sort of fancy methods etc...to identify a trading opportunity and make their trade decision. Whatever methods you use it will not work all the time. Remember trading is a game of probability.
3. We need to monitor and evaluate our performance.
4. We need to write the rules how we manage and control our risk and how we define and identify a trading opportunity with our method.
5. Most importantly we need to have the discipline to follow our rules.
Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.
Wow great information......... I like your blog... keep going ahead..........
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Smarry
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