So You Want to Daytrade

If only it were so simple. Momentum trading, in general, will have a high rate of success -- perhaps as high as 75%. It is, however, that fourth trade that becomes a real problem, as the losses that swell from that stinker will often swamp the gains from the previous three winners. Not so surprisingly, the systems that are being touted do not have a simple mechanized system for managing the risk of these losing trades.

The Special 'Secret'

You see, professional traders always show their true mettle in the management of losing trades. This is the "secret" that every great trader knows but cannot teach to anyone else. In the end, every successful trader relies on a unique combination of bravado, fear, instinct and luck, usually created through experience, long hours and a bit of insanity.

Anecdotal case in point: me. Throughout my career as a trader, I would often (very often) have bad positions. I would trade in and out of them most of the time in a very measured, controlled way. But once in a while, some unconscious alarm bell would go off and I would need to dispose of the position as quickly as I could, irrespective of losses. Like a maniac, I would make outrageous offers (or bids) in very illiquid markets and be out of the position in a very short time.

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