Sunday, September 13, 2009
Now we know that for Dow Jones index, at least there's another months for market to sustain with current trend, when more countries claimed that recession is over. Hence the world stock markets will not having the reverse impact for now, unless there's unexpected bad news happen. Today we going to see how trader maximize profit in stock market.
To answer the question, first we need to know how to calculate the chances or percentage of winning. From random survey result, most traders are making 55 winning trade out of 100 trade involved.
The most common mistake for a trader is putting too much fund in one single trade. Due to the big amount involved, we tend to have the pressure and caused miss appropriate decision making. Many new traders enter the position and hope to gain big amount in one day. However the experience traders know that in a short term trading, the more frequent buy and sell with large amount tend to eat all the principal amount with a few time of big trading mistake.
The trader who survive are those who trade with certain percentage in any single transaction. If you do not have a lot of principal, the common used method would be cut loss in a very tight range. They may even consider 1 to 5 minutes' graph to minimized the loses incurred.
Over confident is a big risk for trader, the same pattern can happen in last several times, but not necessary the next will happen in same way, if one think that he can predict the next move, he already done a very serious mistake. The trading system can point out if “X” happen, then “Y” will follow, but not for every cases. The trading system only increase your chances of win in long run but not a guarantee!
All the traders will have a good days and bad days. Some days you will earn, but others you may lose. Each month one or two days you may earn a big profit, this is what the trader will earn, not nine to five kind of living. The problem is you never know when the “big” profit going to come, it could be the day when you never follow trader's method is the winning day.
Once you have tested with your trading system, then we need to follow it without any exception. The point is making fewer mistakes and making mistakes that are less severe.