The 80 20 Rule for Successful Trend Following
Systems do not make successful traders. Entries are the least important issue regarding trading success. You can have a slight knowledge of fundamental and technical information, and if you are in psychological control, you can make money. If you are not in psychological control you are destined to fail.
Psychology is the least looked at aspect in trading, yet it is the most important.
What is fascinating is that you may have a great system, one that back tested well for decades, yet if the psychological control is not there, you will be the loser. Too often traders will second guess their systems or simply not take trades.
Virtually every successful trader knows that they will face more losing trades than winning ones. The key is to try to keep the losses small. Keeping these losses small the trader survives and stays out of trouble. He or she makes themselves available to stumble into some rare large profits. This goes back to the 4 possibilities I always speak about. Stay out of the big losing trades…most other trades are small profits and small losses and at rare times you put yourself in the position to stumble into large profits. These are rare and unexpected.
Bottom line…invest 80% of your time and energy into the proper psychological aspects of trading. It is never easy nor is trading for everyone. We are thoughts. Think good…Have a complete trading plan and let it work over time. There is no magic system or magic manager.
Past performance is not indicative of future performance