In this section of the course
I will share with you some
I will share with you some
mechanical points of entry
mechanical points of entry
and exit to make your trading
and exit to make your trading
decisions more clinical, as
decisions more clinical, as
well as five simple rules for
well as five simple rules for
trade psychology and risk
trade psychology and risk
management.
I am confident, that with practice, the techniques I am confident, that with practice, the techniques I have shown you in this course can make you a I have shown you in this course can make you a much better trader.
much better trader. But make no mistakeBut make no mistake, there, there is no single system or no single trader who has is no single system or no single trader who has a fool proof system
a fool proof system for trading. for trading. The reason forThe reason for this is that markets are essentially made up by this is that markets are essentially made up by an aggregate of
an aggregate of human emotion. human emotion. When peopleWhen people are feeling good about things, the markets will are feeling good about things, the markets will generally trade up.
generally trade up. When things are not When things are not lookinglooking so optimistic, human emotion will tend to see so optimistic, human emotion will tend to see markets trade down.
markets trade down.
Human emotion however is the one element Human emotion however is the one element that not even the most sophisticated computer that not even the most sophisticated computer algorithms or ‘black box’ market systems have algorithms or ‘black box’ market systems have been able to predict.
been able to predict. This is particularly so nearThis is particularly so near market tops and bottoms where human emotion market tops and bottoms where human emotion is at its greatest, whether it be the irrational is at its greatest, whether it be the irrational exuberance at a market top or the fear and panic exuberance at a market top or the fear and panic that often ensues at a market low.
that often ensues at a market low.
Whilst winning trades will provide you with a Whilst winning trades will provide you with a huge adrenalin rush, it is important too to realise huge adrenalin rush, it is important too to realise that losing trades are also
that losing trades are also inevitable. inevitable. And it is theAnd it is the losing trades that will test your mettle.
losing trades that will test your mettle. If you do however find yourself on the end of a If you do however find yourself on the end of a losing streak, then my advice would be to come losing streak, then my advice would be to come back and visit this section of the course first back and visit this section of the course first before any of
before any of the others. the others. I can almost guaranteeI can almost guarantee that the five rules I am about to describe will take that the five rules I am about to describe will take on a whole, new meaning.
on a whole, new meaning.
Five simple rules for risk management
Five simple rules for risk management Most of the trading books and courses which I Most of the trading books and courses which I have read (the good ones at least, that is) include have read (the good ones at least, that is) include a section on trading psychology and how human a section on trading psychology and how human emotion has such a large impact on actual trading emotion has such a large impact on actual trading decisions. Make no mistake, this is certainly decisions. Make no mistake, this is certainly true.
true. Putting your own money Putting your own money at risk will affectat risk will affect your trading decisions in a way that you simply your trading decisions in a way that you simply cannot simulate through paper trading a market. cannot simulate through paper trading a market. I have found however, that to properly learn I have found however, that to properly learn how to control your emotions in your trading how to control your emotions in your trading and investment decision-making, you need to and investment decision-making, you need to experience the process first of making an actual experience the process first of making an actual trade.
trade. You will nevYou will never fully prepare yourself for theer fully prepare yourself for the rollercoaster ride of emotions that go with trading rollercoaster ride of emotions that go with trading until you place that first trade no matter how until you place that first trade no matter how many trading psychology books you read. many trading psychology books you read. Please do not interpret that as me dismissing the Please do not interpret that as me dismissing the need to have the right trading psychology to beat need to have the right trading psychology to beat the markets.
the markets. It is It is absolutely necessary. absolutely necessary. In myIn my view however, the subject matter of psychology view however, the subject matter of psychology is something I think is best left to be explained by is something I think is best left to be explained by someone who is actually an expert in psychology. someone who is actually an expert in psychology. And don’t worry, there are plenty of books out And don’t worry, there are plenty of books out there on the subject.
there on the subject.
In addition, each individual person has their own In addition, each individual person has their own temperament, their own risk appetite and their temperament, their own risk appetite and their own differing desires for
own differing desires for profit. profit. And whilst IAnd whilst I am more than happy to share my own personal am more than happy to share my own personal experiences with anyone who asks, just because experiences with anyone who asks, just because that was my experience, it does not necessarily that was my experience, it does not necessarily mean it will be the same as yours.
mean it will be the same as yours.
At the end of the day, the objective in trading At the end of the day, the objective in trading should be getting yourself profitable. should be getting yourself profitable. To do this, you need to make sure
To do this, you need to make sure you have moreyou have more winning trades than losers, and that your winners winning trades than losers, and that your winners are bigger than your losing ones. Having said all of are bigger than your losing ones. Having said all of that, there are a few simple rules that you should that, there are a few simple rules that you should know for certain which I do think are absolutely know for certain which I do think are absolutely necessary to control your trade decisions and necessary to control your trade decisions and keep your investment capital intact.
keep your investment capital intact.