| markets in the first place. This is the reason strategy trading makes so much sense.
| THEY HAVE LEARNED TRADING DISCIPLINE | | I have watched many market gurus continually make incorrect market predictions | | and still break even or make a little money because they have followed a | | disciplined approach to trading. More importantly, they used the exact same | | principles that I will show you how to use in creating your strategy. It is these | | principles that make the money, | | To be a disciplined trader, you have to know how and why to enter the market, | | when to exit the market, and where to place your money management stops. You | | need to manage your risk and maximize your cash flow. A sound trading strategy | | includes entries, exits, and stops as well as sound cash management strategies. | | Even the market gurus and famous traders don’t make money from their | | predictions, they make it from proper trading discipline. Over the years, they have | | learned the discipline to control their risk through money management. They have | | learned to take the trades as they come, and not forgo a trade because they are | | second-guessing their strategy or the market. These are the same practices that you | | will learn to include in your trading strategy. | | THEY PROFIT FROM SOUND CASH MANAGEMENT & RISK CONTROL | | Sound money management and risk control are the keys to being a profitable | | trader. I will say over and over again, it is not the prediction or the latest and | | greatest indicator that makes the profit in trading, it is how you apply sound | | trading discipline with superior cash management and risk control that makes the | | difference between success and failure. | | I often tell the story of the great fish restaurant that opened up just down the | | street from my office. It opened with great fanfare and was ranked in the top five | | restaurants in the city. The food was outstanding. But it only took a little more | | than a year and this great restaurant was out of business. Why? Because the key to | | running a good restaurant is not the food…it is cash management and risk | | control. It is making sure your business is run efficiently, keeping your costs (risk) | | in control, and managing your staff effectively. If you believe that the taste of the | | food is what makes a great restaurant, think of how great the food is at your | | favorite fast food restaurant. But, someday, watch how well that restaurant is run. | | Just as in the restaurant business, the key to profits in trading is not in the | | prediction or the indicator, but how well the trading strategy is designed and | | executed. The ability to achieve risk control and cash management will make the | | difference between a successful trader and an unsuccessful trader. If you ever have | the opportunity to watch a successful trader, you will see that they don’t worry | about where the market is going or about predicting when the next big move will | | take place. They aren’t looking to tweak their indicator. They are worried about | | their risk on each trade. Is the trade being executed correctly? How much of their | | total account is at risk? Are the stops in the right place? And so on. | | THEY DON’T HAVE SUPERIOR PERFORMANCE NUMBERS | | If you want to have some fun, look at the performance of a successful market | | expert, one who is known for his or her market predictions and trading expertise. | | You will find that their performance numbers really aren’t any better than an | | average trading strategy. The percentage of profitable trades, the return on the | | account, average profit to average loss, number of losing trades in a row…all of | | these trading parameters are within the average trading strategy performance | | Why is this? Because you can’t predict where the market will go and when it will | | move. But if you use correct strategic trading disciplines, you will make money | | whether you try to predict the market or just trade a good strategy. You might as | | well save yourself a lot of time, energy, and mental anguish and trade a good | strategy. |
