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Showing results for tags 'sound logic'.
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Trading is a maze of different approaches, possibilities, choices and outcomes. From money management to trading psychology, the information we must process to form coherent trading methods and apply them effectively to the markets may as well be endless. This is the very reason why trading can at times be so difficult. “A series of meaningful choices”- a quote borrowed from somewhere else, I believe sums up how we strive to succeed in trading and life in general. Yet when presented with too much information and too many possible routes, how is it possible to make these “meaningful choices” (and good) on a consistent basis? I believe it’s very hard. So my approach is to distill trading into as simple objectives as reasonably possible and then look for, formulate, assess and apply methods which fulfill these objectives in a way which I can make work. So what is my “Not-So-Magic Trading Formula” I hear you ask. Well let me first make it clear that this is not some trading secrets revelation-type thread. They are ten-a-penny or a-dime-a-dozen on the net. They don’t truly exist. They never actually deliver. This is the real “holy grail” so think hard before you again dismiss the wisdom as something you can’t use to get that perfect entry time and time again. What I want to say is that there are basic areas you must work on in a structured and ordered way to enable you to trade by a full and comprehensive plan. I know this is something many do not do and so it’s important to start simply. To ensure you are able to make a “series of meaningful choices” you must cover in your plan:- Strategy- What are you trying to capitalize on specifically? How much risk is potentially associated with your plan? Typically, how often do trade opportunities show up and how frequently are they successful? Market assessment- What is the market doing at the moment? If your strategy is a bracket strategy, it’s probably not going to work very well when the market is trending. How exactly do you define specific market conditions? Trade management- Do you have rules to exit trades early? Do you have fixed or variable profit targets? Do you fully understand that in spite of having done all your research and worked out a great plan, any individual trade can look as good as anything and yet other participants ready to act can end up disagreeing on that specific trade and just because that trade doesn’t work, does mean that the strategy is rubbish? I don’t want to keep going, I just wanted to illustrate the fundamental constituents to trading so that you can decide for yourself what exactly is important to your trading and how the vast amount of information out there relates to your plan. Then maybe, just maybe you will be able to make that “series of meaningful choices”.
