May 4: You Win Some You Lose Some – Critical Advice For Traders That Can`t Stick to a Plan

by Dave on May 4, 2006

Surprisingly, many profitable speculators have success rates between 30 percent and 50 percent. These traders are not successful because they predict prices well. They`re winning because their profitable trades far exceed their losses. The truth of the matter is all systems win and lose.

Psychologically, this can make following a system difficult. Market professionals achieve success in this environment by controlling risk with money management rules. But controlling risk goes against our natural tendencies. Most people don`t want to manage risk, they want to be right. Despite the proven fact that money management is so important, when they first come to me many of my clients focus their time looking for the perfect entry. It`s their search for the Holy Grail. They want a perfect indicator.

Not only is this indicator going to get them in right at the bottom of the trend, but it`s also going to tell them at the exact point at the top of the trend when to get out. And here`s the best part and about this indicator. Apparently, it can guarantee success and it`s never, ever wrong.

Unfortunately, though I don`t like to disappoint my clients, I need to let them know the hard truth. There is no perfect indicator. Instead there are carefully set money management rules that will place you in control. With this control you`ll be able to follow the two cardinal rules of trading you`ll be able to let your profits run and cut your losses short.

Once these money management rules are in place your system can be set on autopilot. You won`t need to worry, `Should I be holding this stock?` or `Shouldn`t I be holding that type of stock?` This uncertainty is what people are confronted with when they don`t have their rules set. The end result is that small losses end up being big losses.

To make matters worse, a few of these big losses strung together can have a detrimental effect on your trading capital. Unfortunately, it`s much more difficult to trade to gain back money you have lost then it is to trade with profits that you already have in hand. If things go to the absolute extreme, you run the risk of wiping out your entire trading float, as many traders do when they first get started. But, with your money management rules in place, you can ride out the ups and downs of every trading system and succeed where many fail.

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This article has been extracted from David Jenyns` Trading Secrets Revealed Course. Unfortunately this course is currently sold out. To be notified if and when extra copies are released, please send us an email and we`ll let you know when you can purchase a copy of this highly recommended course. Click Here and send us an email. and be sure to mention you want to be on the `Trading Secrets Revealed Waiting List`.

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