I received an email from a vectorvest user that made me very sad. The person subsribed to vectorvest about a month ago, started trading real money with it, and promptly lost a sum of money via cutting loss within contra period.
For anyone who wants to stand any chance of not losing money in the long run, the following is non-negotiable. With software tool or no software tool, anyone who is successful in the long run is doing the following, or something similar:
- Follow timing signals. Most important rule.
- Write down your trading plan. Fail to plan, plan to fail.
- Define and follow money management rules....example : risk only 1% of your trading equity for each trade. Better to be rich slowly than poor fast.
- Review past trades. do not make same mistakes again
- Backtest, or/and forwardtest for a time period. Determine your probability of each trade, maximum drawdown, expected or average profit per trade, maximum loss, minimum loss
- Adapt trading plan to changing market conditions when necessary
- If buying, search for strong stocks. Least important rule.
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