Hi

We have all heard: Trade what you see not, what you think.

If you have tested out your rules on 1,000 trades or more, why are you thinking? You should be doing nothing more than following the rules you test.

Another reason traders are thinking is because they've had several losses in a row and, now their only goal is to get the money back as fast as possible. This creates the wrong mindset because now you are chasing the market and, you throw your rules out the window.

 

Bernard Baruch one of the most famous traders on Wall Street during the 1929 stock market crash said it best: "If a trader is correct half the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the trades where he has been wrong."

Even the most successful traders make mistakes. These trades that don't work will lead to losses and can turn into very large losses if they are not managed. This is why you hear, "Cut your losses short. Let your profits run."

Here is a fact and a cardinal rule you will have losing trades: "In order to make large sums of money, you first have to learn how to learn to lose small sums when you have losing trades.

Most traders are trying to avoid or altogether remove losing trades; that's a complete exercise in futility. Everybody has losing trades; cut your losses short and let the winning run.