Trading Educators Blog
How do you go about making trading decisions?
Careful analysis of all possible alternatives and all possible consequences of your trading decisions is the first step in good decision-making.
Make every attempt to avoid impulsive trading decisions, invariably these lead to taking unnecessary risks. Strive to have a clearly defined trading plan, but keep it as simple as possible.
Chart the equity of your trading method so that you can quickly know that you are no longer winning. Charting you equity is one of the best ways I know to manage risk. Never enter a trade that has the potential to wipe out your trading account.
Be sure you do not over analyze, analysis paralysis is one of the worst things that can happen to a trader.
Avoid trying to find the “sure thing” trading method, system, or plan. You will never be able to be fully certain and secure about your trades.
Go with the percentages. That’s what they do in the gambling centers. They know on a percentage basis that in the long run they will win. So they accept losses, but they keep them controlled.
It doesn’t matter how often a method or system wins, what matters is the bottom line: does the method or system make money for you?! If it does, then stick with the bottom line.
In the end, becoming a professional trader requires taking risks. Putting your money on the line is hard to do, especially for a beginner. Do your best to control risk and trade from a plan. You will have losses, but you can keep them small. In time, your trading decisions will become better and better.