Brett N. Stinberger - Doctor of Philosophy and Professor of Psychiatry at the Medical University in Syracuse, NY. New York. He is also an active trader and writes articles on market psychology. The author of the book "Psychology of Trade, 2003. Doctor Stinberger published over 50 articles on short-term approaches to behavioral change for traders.
Sometimes you can hear the various debates as to whether more commercial success with trading techniques or psychology. The answer of course is that with the fact and with another, but the point where they intersect - this is risk management. A huge percentage of commercial success or failure can be established through risk management. In one article on risk management were given the data that different traders and trading companies, 90% of all profits were associated with 10% of all transactions. While traders would make money on most of their transactions, the reality for traders is that only a minority of transactions are winning - and those few big wins provide an advantageous ratio of profits to losses. Article continues to review that, if 10% of transactions is of great profits, it follows that a large percentage of transactions should be in time to give. A key skill in trade was the recognition that the transaction was wrong before she upset the ratio of profits to losses. Very often I have seen good traders out of the transaction when the transaction were not able to move in their direction, while the bad traders come only once the market has moved against them. Yet, equally true that, if 10% of transactions are going to be the lion's share of the profits, traders should be ready to receive the maximum benefit from good deals. This not only means finding the right moment, when you can cut your losses and let your profits grow, it also means being ready to sell a sufficient size to maximize profits from a good deal. Bad traders, who I met, offer the maximum size of position when they are in the worst moments of their trade. Typically, they have just lost one or more transactions, and is now trying to return the money. Successful traders are able to determine the excellent shopping opportunities and patient in waiting for them - and use the maximum allowable size of the position to make maximum use of these opportunities to their advantage. That is why 10 of good deals to more than fill 90 empty and losing deals. One very successful trader has promised to tell me the secret of trading success. Of course, my curiosity was piqued and I asked, "What is it?" He answered the question: "What is your best position in relation to a normal size?" "Three to one," I said. He smiled, "Consider 20 to 1," was his advice and his formula for success.
I trust him completely. The secret of his success has nothing to do with finding a better oscillator, regression analysis or graphical models. He was successful because he had the ability to identify and to wait especially lucrative opportunities, and then derive maximum benefit from them. While the 20:1 ratio of the size of the position will be slightly velikovato for me personally, I think that this principle applies: the success is partly a function of determining the amount of the transaction on the logical rather than psychological cause. This is one reason why trade is so difficult. It is an unusual mixture of features, which allows the trader to be prudent to risk giving up the transactions that are not moving as quickly as expected, while there is a good opportunity to derive maximum benefit from it. It is easy to find traders who are reluctant to take risks and keep their positions within one or two lots, as well as easy to find traders who would be free to vary the size of positions, including those times when they are upset their trade. What occurs much less frequently, it is traders holding "golden mean" - can take to limit and 90% of the cases that do not work, and to act aggressively in 10% of cases where there is a movement that can make maximum use.
What is true to size, will also be true with respect to time. Much can be found just to see how long a trader holding a winning deal to losing the deal. If a trader goes quickly from transactions that do not move in the desired direction, the average retention time of such transactions must be sufficiently low. On the contrary, for a successful transaction, it is not unusual to see that 10% of transactions are kept for a long period of time.
In doing so, almost invariably it is winning deals that generate a significant share of overall profits. Do unsuccessful traders as can observe a small percentage of deals with long-term retention - but it is losing the deal. I once asked a trader, why he held a long position in the unusually long period of time. He looked at me somewhat derisively and said, "because I had the authority to do so!" He was ready to sit in during a very volatile market, while he was walking in his direction and so far nothing has indicated that he is ill-defined bottom. This transaction is one made by his month's earnings. This may be true for much of his life. The same is often true on success in career and business. Successful people are able to take on a dozen projects over the years, but to concentrate on only one of them, when it seems promising. The Company may issue the ten models of a product, and quickly abandon the nine others, making significant money for that which was adopted by the market. Even successful artists and inventors, as it turned out the researcher Keith Simonton, tend to spend a large amount of creative effort in the different works, with its popularity thanks to a small number of works, which will attract the attention of people.
Good traders manage the risk in the market. Successful people manage the risk in their lives. This not only relates to how many different attempts we are making in life, but also on how many we turn in life that determines our ability to derive maximum benefit from the promising episodes that occur in our way.
Sometimes you can hear the various debates as to whether more commercial success with trading techniques or psychology. The answer of course is that with the fact and with another, but the point where they intersect - this is risk management. A huge percentage of commercial success or failure can be established through risk management. In one article on risk management were given the data that different traders and trading companies, 90% of all profits were associated with 10% of all transactions. While traders would make money on most of their transactions, the reality for traders is that only a minority of transactions are winning - and those few big wins provide an advantageous ratio of profits to losses. Article continues to review that, if 10% of transactions is of great profits, it follows that a large percentage of transactions should be in time to give. A key skill in trade was the recognition that the transaction was wrong before she upset the ratio of profits to losses. Very often I have seen good traders out of the transaction when the transaction were not able to move in their direction, while the bad traders come only once the market has moved against them. Yet, equally true that, if 10% of transactions are going to be the lion's share of the profits, traders should be ready to receive the maximum benefit from good deals. This not only means finding the right moment, when you can cut your losses and let your profits grow, it also means being ready to sell a sufficient size to maximize profits from a good deal. Bad traders, who I met, offer the maximum size of position when they are in the worst moments of their trade. Typically, they have just lost one or more transactions, and is now trying to return the money. Successful traders are able to determine the excellent shopping opportunities and patient in waiting for them - and use the maximum allowable size of the position to make maximum use of these opportunities to their advantage. That is why 10 of good deals to more than fill 90 empty and losing deals. One very successful trader has promised to tell me the secret of trading success. Of course, my curiosity was piqued and I asked, "What is it?" He answered the question: "What is your best position in relation to a normal size?" "Three to one," I said. He smiled, "Consider 20 to 1," was his advice and his formula for success.
I trust him completely. The secret of his success has nothing to do with finding a better oscillator, regression analysis or graphical models. He was successful because he had the ability to identify and to wait especially lucrative opportunities, and then derive maximum benefit from them. While the 20:1 ratio of the size of the position will be slightly velikovato for me personally, I think that this principle applies: the success is partly a function of determining the amount of the transaction on the logical rather than psychological cause. This is one reason why trade is so difficult. It is an unusual mixture of features, which allows the trader to be prudent to risk giving up the transactions that are not moving as quickly as expected, while there is a good opportunity to derive maximum benefit from it. It is easy to find traders who are reluctant to take risks and keep their positions within one or two lots, as well as easy to find traders who would be free to vary the size of positions, including those times when they are upset their trade. What occurs much less frequently, it is traders holding "golden mean" - can take to limit and 90% of the cases that do not work, and to act aggressively in 10% of cases where there is a movement that can make maximum use.
What is true to size, will also be true with respect to time. Much can be found just to see how long a trader holding a winning deal to losing the deal. If a trader goes quickly from transactions that do not move in the desired direction, the average retention time of such transactions must be sufficiently low. On the contrary, for a successful transaction, it is not unusual to see that 10% of transactions are kept for a long period of time.
In doing so, almost invariably it is winning deals that generate a significant share of overall profits. Do unsuccessful traders as can observe a small percentage of deals with long-term retention - but it is losing the deal. I once asked a trader, why he held a long position in the unusually long period of time. He looked at me somewhat derisively and said, "because I had the authority to do so!" He was ready to sit in during a very volatile market, while he was walking in his direction and so far nothing has indicated that he is ill-defined bottom. This transaction is one made by his month's earnings. This may be true for much of his life. The same is often true on success in career and business. Successful people are able to take on a dozen projects over the years, but to concentrate on only one of them, when it seems promising. The Company may issue the ten models of a product, and quickly abandon the nine others, making significant money for that which was adopted by the market. Even successful artists and inventors, as it turned out the researcher Keith Simonton, tend to spend a large amount of creative effort in the different works, with its popularity thanks to a small number of works, which will attract the attention of people.
Good traders manage the risk in the market. Successful people manage the risk in their lives. This not only relates to how many different attempts we are making in life, but also on how many we turn in life that determines our ability to derive maximum benefit from the promising episodes that occur in our way.
Forex Magazine
based on www.brettsteenbarger.com
based on www.brettsteenbarger.com
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