10 Bankrupt PDF
10 Bankrupt PDF
http://www.tradingforbeginners.com
I was thinking about an article I read some time ago that 90% of traders who ever trade
lose their account and that 10% actually go bankrupt. If the first number doesn't scare you
then the second definitely should.
Why is it then that there is such a large number of traders failing? It is not because they
are stupid; in fact most traders have an above average IQ and are above average in most
categories such as education and income. So why do they fail?
By education I don't just mean learning how RSI works or drawing lines on a chart. I
mean thoroughly educating yourself in all aspects of your chosen profession. Educating
yourself on the correct psychological approach to the market! Educating yourself in the
correct risk management techniques relative to your account size. Educating yourself in
the correct entry and exit methods for the trading style that suits you.
This, my friend, is where I hope to be of some help. I don't have all the answers nor do I
profess to be some kind of guru but I will do my best to point you in the right direction.
We are continually bombarded in magazines, emails and the general media with claims of
making astronomical amounts, just by applying the vendor's latest method or system.
Don't get me wrong, there is good stuff out there but the vast majority is not worth the
price you pay. At www.surefire-trading.com I also recommend products but I have at
least read the ebooks or courses and think they have some value to my subscribers and
they all have a refund guarantee.
Fundamentals Of Trading
Trading is not an exact science. You can't do X and get Y every time. It is as much an art
as it is anything else. There is no magic formula. Trading is all about probability. It is the
art of correctly applying a set of carefully thought out rules and allocating the probability
of that event to result in success.
Each trade is an independent event. The market does not remember if you lost or made
dollars the last time you traded.
The way you approach the market psychologically has as much to do with your success
as any trading plan.
Risk management is crucial if you want to have any hope of becoming a successful
trader.
Matching a method of trading with your personality is the only way you will ever feel
comfortable in the markets.
An adequately funded account is necessary - not only to be able to take the trades you
want, but also so you don't feel every trade is a live or die situation.
The journey to the road of successful trading will make you confront your deepest fears.
Your armor on this journey will be confidence, knowledge and belief in yourself that you
can achieve your dreams.
Never, equate your success or failure in the markets with who you are as a person!
As humans we have a natural tendency to try and influence our surroundings and events
we take part in. This is one reason we, as a species, have succeeded but it is also one of
the fundamental flaws we all have when trying to achieve success as a traders.
As traders we have to realize we have no control over the market and if we accept that
then we have to accept that we can not influence the direction of the market.
The problem of course is we have a tendency to try and succeed and when inevitable
losses come, it is easy to let those losses effect us emotionally. Becoming euphoric when
you hit a winning streak is almost as detrimental as becoming depressed when you have a
string of losses.
We as traders have to try and achieve the state of impartiality. We have to accept that we
will have losses as readily as we will have wins. Reaching the stage where you can
comfortably accept loss in the knowledge that your method of trading will produce
profits in the longer term is the state we have to aspire to.
Risk Management
Whenever I think of risk management I always think of an article I read on 925 CTA
programs between 1974-1995. It essentially confirmed what I have long held to be true.
To summarize the report, of all the CTA's who managed funds, the most consistently
profitable were the ones with the best risk management systems.
To trade successfully you have to take a long look at yourself. Ask and answer the
following questions.
How much equity do I need to start? How much should I risk on any one trade? Am I
undercapitalized?
During the course of these lessons I will do my best to help answer these and other
questions.
As a trader you will probably fall into two main categories, traders who like to trade the
breakout and traders who like to join the trend once established. We could also add
congestion traders, reversal type traders and mechanical signal traders but for the vast
majority of traders you are going to fall into one of the two categories.
If you are a trend trader, you like to define a trend and then find a way in. This may be
with the aid of fibonacci retracement levels, moving averages, Gann or one of the other
many indicators available today. Your goal is to enter the trend as early as possible with
the least amount of risk.
Breakout traders like to enter the market on the breakout of a previously identified range.
This may be support/resistance areas, rectangles, triangles or one of the many other chart
patterns. The secret to this type of trading is to determine a valid break.
In future lessons we shall begin to look at the more technical side of trading and how you
can apply technical analysis to the markets to increase your probability of success.
Conclusion
During this lesson I have tried to give you a glimpse into the world of trading. I have also
taken a slightly negative stance, as I don't want you to get unrealistic expectations of
what to expect.
On the more positive side, trading is a fascinating world, which will allow you to really
exercise your brain. There is no other arena where you get to play with some of the best
minds in the world on a level playing field.
Once mastered, if you can ever use that term then the possibilities are endless. Hopefully
I can help you achieve your goals
Good Trading
Best Regards
Mark McRae
This lesson is part of the 'Traders Secret Library” which you can see at
http://www.tradingforbeginners.com
Information, charts or examples contained in this lesson are for illustrational and
educational purposes only. They should not be considered as advice or a recommendation
to buy or sell any security or financial instrument. We do not and cannot offer investment
advice. For further information please read our disclaimer here