Probability in Trading

It is natural that traders can not always win, because the income arises and the risks and losses are an integral part of trade. But there is something that you need to know about the trading process, and that goes beyond the dollar value. As traders move in the right direction in its development, to be sure that their efforts will be able to move them to future success? This depends not only on the order to correctly carry out the transaction, but also from, in order to avoid potential errors.

The three basic principles that can help in preventing and possibly avoid mistakes - it is likely self-discipline and responsibility - sounds simple enough, but much harder to implement them.

Not one successful trader will not deny that psychological preparation is as essential as the graphics and market signals. Trade is inextricably linked to the probabilities and, while every trader faces a losing position, or loss, success, as it can assess the trader, depending on how the loss of well-managed psychologically.

A sure sign of potential disaster is the retention of large losses in the open position and at the same time taking a lot of small profits. This is contrary to the market, The wise trader and mentor of the "Commodity Corporation" Amos Barr Hostettera, who said - "take care of their losses, and your income to take care of themselves." Trader, who deceives himself mentally, believing that the small profit reimburse huge losses, like the ostrich that hides its head in the sand.

Losing Most of the bands is the result of the probability distribution. Of the 100 transactions, the system may face a losing position to eight transactions in succession, and it is precisely at this time, the trader begins to question the reliability of the system. It is also usually the worst time to stop trading if the trader has followed its methodology, because experience shows that the winning band is usually followed by losing.

An analysis of daily transactions, allowing the trader to identify some common mistakes, such as lack of discipline, weakness in preparation for sale, nevyderzhannosti and other related errors. One of the big advantages of the method of recognition models to trade on the movement is probably related to each model. The gain is a matter of execution of all transactions, as the model will evolve.

Traders must accustom ourselves to think the probability of the three categories of very important reasons:

1. No one knows with 100 percent certainty, whether the transaction is profitable or not.

2. No one knows exactly how much money to be made or lost on a particular transaction.

3. If the trader does not manage a profit and does not know with 100 percent certainty what the deal will work, the trader must spend all his time to concentrate on one element of trade, which he can control, namely the commercial risk.

The key to success lies in the ability to determine exactly how much a trader can afford to lose. Winning thinking - "how much can I lose?", While the playback think - "how can I win?". This fact is easy to demonstrate on the example of a casino. Anyone visiting Las Vegas welcomes the bright colorful slot machines, which whistle tourists with full purses, inscriptions like: "The prize of one million dollars." However, no visitor will never see the caption: "This machine has three million dollars this year." When a trader starts to think about the losses, the probability of winning will increase significantly.

To think about the loss of discipline is required. If you focus on trade, the likelihood of gains or losses and the alternation of those bands and others, as well as risk management, the risk becomes more manageable and can give the trader the necessary confidence.

The discipline required to trade in various stages of trading. First, there is training. With proper training, and trade becomes a simple, but it takes time. It takes many hours of training before any transaction is carried out. The preparation includes several steps:

Psychological - Traders should consider what risks are present for the transaction, and know in advance how to withdraw from the market at any point. Psychological preparation, following the experience, also implies the exclusion or limitation of consumption of alcohol from Sunday to Thursday, because it usually requires up to 24 hours to completely clear the blood system. Better that the brain is working at an optimal level.

Technical - Methodologies vary each trader individually. All trade possibilities must be explored. Daily practice of viewing schedules can open a lot of good opportunities. This requires a lot of time, an integral part of trade. Found possible, however, does not guarantee you a profit.

Physical - Traders must remove voltage positive ways. Select the time to do some physical exercises like jogging, walking, swimming, etc.

The discipline is also needed in the performance of trade. Control of risk is the most important element in the conduct of transactions. Never forget how devastating the loss could damage your confidence. This is particularly detrimental to the internal feeling trader.

Tracking lucrative deals in the process of development also requires discipline - follow the terms of trade. Do not worry about minor fluctuations, if your goal above. There are two questions that every trader should ask: "Will the market, after I opened the position? Can I afford to risk in this deal?" If the answer to both of these questions is yes, then the trader must remain in the market.

Along with discipline, responsibility also plays a significant role in trade. While he is on the market, the trader is fully responsible for their trading decisions - and no one except him. Do not take personal responsibility like the vskakivanie of rapid river without a life jacket in the hope that somewhere there is a lifeguard on the shore. Trader can remain alive only if he is responsible for their own destiny. Enjoy the good decisions and learn from the bad. Place the order, close the position and take profits or, as it is not difficult to accept the loss if it is a responsible decision that needs to be done and this is consistent with your trading plan.

Traders can and often look for excuses as to why something went wrong. Again Hostettera quote - "Forget about their profits, but forget about their losses even faster."

Acceptance of responsibility can be improved by the inclusion of several points or reminders of the trade. What works for one trader may not work for another. One way to solve this problem could be placing a reminder on your computer. This reminder can be marked: "Did the market model after the opening of the position? Has achieved the initial goal for the price?".

If the answer to both of these questions is yes, then it is time to close the position. If the answer is no, then the trade should continue. Trade - a business, dealing with probabilities, not with certainties. Hostetter believed that "we will never know what the deal will work. The problem arises when we only think we know it."

Probability, discipline and responsibility are the characteristics that every trader should strive to develop themselves. Probability implies that the line losses will also occur, as the band gains. The question is how to recover from these losses. Discipline and responsibility of helping to prevent a devastating loss and to help in the reconstruction. Be disciplined when you exit or stay in the market, and accept responsibility for their actions. Once again, the loss is not 100 per cent preventable, but with the right trading strategies, and psychological mood, many of them can be avoided.

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