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Most new merchants are inclined to focus nearly all their time and vitality on discovering practically excellent “setups”, however commerce setups, even excellent ones, are *not* the important thing to profitable buying and selling. It is the *approach* you commerce your setups that retains your losses smaller than your good points. And that is the only most important key to buying and selling success. To me, the method of limiting losses is extra than simply cash administration…it’s survival.
I am unable to offer you an inventory of mechanical survival guidelines that can take the place of expertise and make you a profitable dealer in a single day, however when you follow the next ideas in your buying and selling, you may be on monitor. You will be doing simply in regards to the reverse of the group, and you will ultimately be taught to restrict your losses. Limiting your losses is the one approach I do know to earn cash on this enterprise.
The next pointers will sound radical, however they’ve guided me in making my residing from buying and selling for a few years.
1. If a commerce does not go your approach throughout the first one to 5 minutes, get out. I normally get out inside one or two minutes as quickly as my perceived edge is gone.2. If a commerce goes in opposition to you within the first few seconds, start drawing in your exhausting cease and/ or your goal, attempting to get out of the commerce at break even.
3. By no means let your exhausting stops get hit. When it occurs, you could need to take a break and get some contemporary air.
4. Laborious stops are adjusted to market situations. For the time being (July 6,2005) I’m utilizing 1.50 level exhausting stops on the SP futures.
5. By no means transfer your exhausting cease away out of your entry level, hoping {that a} dangerous commerce will flip round.
6. If you end up *hoping* as you commerce, it’s a clear signal that you’re not following good survival (cash administration) ideas.
It is going to be unattainable to place these ideas collectively with no set of high-probability setups. With out good setups, buying and selling is only a
flip of the coin.