Jump to content

Trading is about knowing where the market is going.


Recommended Posts

Just sharing the fundamentals. There are only 3 ways the market can go. Up, down or sideways. In other words, if we bet on 1 way. There is only 1/3 probability we can make money. 

Can we have 2/3 probability of winning? It is possible, if we hold a sideway position long enough for it to move up.

But is it possible to have 3/3 or 100% win? Hmm... it is not possible. Yet it seems, we have many (novice) people who trade and hope to win all the time. 

So, why is it most traders lose money in the market? Winning traders form around 10% of the market participants.  

If you can't win at trading, find out why. As a famous saying goes. Tell me where I die and I make sure I don't go there. It is normal to make losses in trading, just make sure the losses are not too big. Learn from it and make better trading decisions next time.

 

 

  • Like 1
  • Thanks 1
Link to comment
4 hours ago, igungho said:

It is normal to make losses in trading, just make sure the losses are not too big.

That's the sentence. You don't really care about where the market is going, you are fine as long as you can handle your exits. 

If you focus on 'when to enter' your system will be wrong most of the time, but if you focus on how to handle drawdowns you might get it right.

That's why TA books are only useful as door stoppers or monitor lifters. 

  • Like 1
Link to comment

Hi @igungho

Thanks for sharing.

6 hours ago, igungho said:

There are only 3 ways the market can go. Up, down or sideways.

At any given time markets are either ranging or trending. When a currency pair or stock is trending it is making higher highs and higher lows in an uptrend, or lower highs and lower lows in a downtrend. When a currency pair or stock is ranging, however, price action moves between a relatively defined level of support and resistance for an extended period of time.

6 hours ago, igungho said:

It is normal to make losses in trading, just make sure the losses are not too big. 

Get comfortable with the fact that losing is part of trading, set stop-losses and limits to define your risk ahead of time, and aim to achieve proper risk/reward ratios when planning out trades.

6 hours ago, igungho said:

Learn from it and make better trading decisions next time.

To practice solid risk management, traders should:

Work out their attitude to risk, thinking about risk/reward ratio, position size, and percentage of account balance for each trade.

Place stop losses to protect against the market going against their position.

Be wary of leverage and using too much.

Keep a handle on emotions.

Use a journal to make decisions based on existing data rather than personal feelings.

 

Have a look at this blog very interesting:

 

All the best - MongiIG

Link to comment
1 hour ago, jlz said:

but if you focus on how to handle drawdowns you might get it right.

Hi @jlz

Thanks for sharing.

Below are six risk management techniques that traders of all levels should consider:

Determine the risk/exposure upfront.

Optimal stop loss level.

Diversify your portfolio: the lower the correlation, the better the diversification.

Keep your risk consistent and manage your emotions.

Maintaining a positive risk to reward ratio.

 

All the best - MongiIG

  • Like 1
Link to comment
  • 2 weeks later...

Trading without a plan is a plan for failure. But what is a good trading plan? Do we trade based on technical analysis or maybe a blackbox that give us signals? Surely, there has to be a better way other than just blindly following someone recommended trade plan. One thing is certain, any good trading plan has to be consistent in performance. This means it has to have a stoploss and a target based on certain parameters even before we enter into a trade. 

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,174
    • Total Posts
      90,695
    • Total Members
      41,276
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    muntazir
    Joined 28/01/23 09:29
  • Posts

    • Capital, win loss ratio. If you have a trading edge and you can consistently win 50% of your trades, so your winning 5 trades out of 10. So if your risking 1% of your capital per trade, out of your 10 trades 5 would be losers, so that’s 5% loss and realistically out of the 5 winning trades, some would make small profits, some break even and 1, 2 or 3 could run nicely IF you can let your profits run, basically your making money out of 2 trades out of the 10 trades (80/20 Rule Pareto principle) So a $20,000 acct risking 1% is $200 per trade, this will keep the trader with his trade risk based on being able to win 50% of his trades. A long term trend trader can win with 30% wining trade. Basically you need to know your numbers. Rgds Pete
    • Investing in stocks can be a great way to grow your wealth over time. However, there are different approaches that investors can take when choosing which stocks to buy. Two of the most popular approaches are growth investing and value investing. Growth Investing Growth investing is an investment strategy that focuses on buying stocks of companies that are expected to grow at a faster rate than the overall market. These companies are often in industries that are growing quickly, such as technology or healthcare. Investors who use this approach believe that these companies will be able to generate higher profits in the future, which will lead to higher stock prices. One of the main advantages of growth investing is that it can potentially provide higher returns than the overall market. However, it is also riskier than other investment strategies, as these companies often have higher valuations and more volatile stock prices. Value Investing Value investing is an investment strategy that focuses on buying stocks of companies that are undervalued by the market. These companies may be in industries that are out of favour or have recently experienced challenges, but they have strong fundamentals and a history of profitability. Investors who use this approach believe that these companies are undervalued and that their true value will be recognized in the future, leading to higher stock prices. One of the main advantages of value investing is that it can potentially provide lower risk than growth investing. However, it may also provide lower returns in the long run, as these companies may not have the same growth potential as companies in the growth investing category. Comparing Growth and Value Investing Growth and value investing are two different approaches to stock investing, each with its own advantages and disadvantages. Growth investing can potentially provide higher returns but is riskier, while value investing can provide lower risk but potentially lower returns. An investor may choose one approach or a combination of both. A portfolio that contains a mix of growth and value stocks can provide a balance of potential returns and risk. Conclusion Both growth investing and value investing can be effective ways to invest in stocks. The key is to understand the potential risks and rewards of each approach and to choose the one that aligns with your investment goals and risk tolerance. Analyst Peter Mathers TradingLounge™ 
    • I am a beginner, and I must say, there are a lot of rules to the trading game that one must abide by if they want to be successful.   Here, the writer mentions several basic rules for day vs swing trading.  However, I find that often times, the reasoning for these rules is not as  obvious for a beginner as it may be for an expert.   The 'why' factor if I may. For example, why must you have a large capital to trade with as a day trader? Because your positions must be large so that a small change in price will be augmented and turned into a large profit. Also, with such high risk, the margin will be specially high, given the trader is taking up large positions at a time.  Without a large amount of capital, positions may be forced to close due to funds being below margin requirements.  When this happens, you can expect to lose tons of cash, fast.  I learned the hard way. All the best, David Franco      
×
×
  • Create New...