This is actually the continuing story of our two imaginary traders, Philip and Paul.
Peter is a professional trader, Paul is not. Peter has a tested, proven, written trading plan that this individual follows each time this individual enters a trade, Paul does not. fusionex
Peter and Paul have had significantly different Trading activities – Peter just made another substantial profit – this time from the Have market, Paul has lost heavily.
A chance stopping up in Peter’s group of friends eventually at lunch launches Paul on a learning curve that will see him become a good trader, but not without some hard lessons along the way.
Today Peter shares his trading plan and the value of experiencing a trading plan with Paul.
“Today we works on your Trading Plan, ” Peter informed Paul as they sitting down for the start of their next each week mentoring meeting.
Peter presented with Paul a copy of Robert Miner’s book, Way Trading, and said, “Here, read this section of this wonderful trading reserve. ” Paul read to himself quietly as Chris poured them both a cup of tea.
“The purpose of Technical Research is not to be able to accurately identify every market position, all the time. While this may be the daydream of many analysts and most amateurish traders, it is an impossibility.
“Every method of technical analysis has really limitations and at times provides contradictory information. Unless of course the analyst, trader or investor is willing to accept that his or her analysis will every now and then not provide a comfortable view of market position, she or he is doomed to failure.
“The objective of technical examination is to identify those market conditions and the specific trading strategies that contain a high probability of success.
“If there is a key concept associated with trading and making an investment, it must be possibility. All constantly profitable dealers and investors know that every trading and trading decision only has a probability of success, never a certainty.
“Losses are inevitable and are just as much a part of successful trading as profits. If the trader has a successful trading plan, he or she should have no more psychological response to a reduction than to a get. Each will be inescapable.
“While it could be difficult to maintain a completely non-emotional relationship to trading and investing, an awareness that trading is a company of odds will go a considerable ways towards developing a stable frame of mind towards the Business.
“All successful traders have a defined, written trading plan. The trading plan can take many forms. In the very least, it will provide the nominal guidelines that must be satisfied before an investment will be looked at. It may be as complex as a long set of very restrictive rules that must be satisfied before a trade can be considered.
“Each has is actually strengths and weaknesses. None method, whether rules or guidelines, guarantees success, nevertheless the lack of either will ensure failure.
“Why have a trading plan and not follow it? Every guideline and rule must be included with reason and purpose. All successful traders and investors constantly follow their trading plan and so they know that if they violate their trading plan it will always be costly in the end.
“A trader who does not constantly abide by his or her trading plan is doomed to inability. ”
Paul looked over Philip after he finished reading, and understood the ramifications of what Robert Miner had written. He experienced never had any type of trading plan. This individual had just taken the advice of other people and bought, held and expected them to be the best.