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Notice: "Enea Doku HeadStart Fund" is PAMM Investment Account
Past performance is not indicative
You don’t have to get into or out of a position all at once. Most traders tend to pick a single entry price and a single exit price. It is often better to scale into and out of positions. For example, consider a common dilemma faced by traders. Let’s say you have a strong conviction that a market will move higher, but prices have just witnessed a significant upswing. You are concerned that if you buy now and there is a correction, the initial loss may force you out of the market, even if you are
Interestingly, the need for emotional comfort will even have a detrimental impact on systematic trading (i.e., computerized, rule-driven trading), an area of trading one might reasonably have assumed would be free of emotionally based decisions. Typically, when people approach systematic trading, they will test their system rules and then discover that there are many past instances when following the system rules would have led to uncomfortably large equity drawdowns—an observation that will be
This point has never been made but, you should be very wary of trumpeting your predictions about what a market will do. Why? Because if you announce what you believe a market will do, presumably to impress others with your market acumen, you will tend to become invested in that prediction. If the evolving price action and market facts seem to contradict your forecast, you will be more reluctant to change your view than you might otherwise have been. You will find all sorts of reasons why your or
“Know your surrender point.” Before you put on a position, you have to know the point at which you will give up to the market because the pain is too great.
One of the core money management principles is that before entering any position, predetermine the exit point based on assessment of where the market should not go if you are right about the trading idea. “I know where I’m getting out before I get in.”
Why is determining where you will get out before you get in so important? Becaus
There is a trading proverb that says, “Even a poor trading system could make money with good money management.” Have you heard that saying before? Well, if you have, forget it, because it is really one of the stupidest things that has ever been said about trading. If you believe that good money management can salvage a poor system or methodology, I invite you to go to a casino, walk over to a roulette wheel, use your best money management system to bet, and see how well that works out for you. I
Many professional traders describe how their transition from a losing trader to a winning trader required accepting that losing was part of the game
If you get out even, you can say, “I wasn’t wrong. I didn’t make a mistake.” That need not to be wrong is exactly why people lose. So, the irony is that amateur traders lose money because they try to avoid losing. Professional traders, however, understand that they need to take losses in order to win. They understand that taking losses is an in
Most traders think there are two types of trades: winning trades and losing trades. Actually, there are four types of trades: winning trades and losing trades plus good trades and bad trades. Don’t confuse the concepts of winning and losing trades with good and bad trades. A good trade can lose money, and a bad trade can make money. A good trade follows a process that will be profitable (at an acceptable risk) if repeated multiple times, although it can lose money on any individual trade.
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