Why You Lose Money Trading
NEW YORK (TheGoldAndOilGuy.com) -- You need to know how to turn your trading into a simple automated trading strategy. The brutal honest truth is a tough pill to swallow. The fact that most of the time it's not the strategy that has failed; it's you (the trader) which is why you need a simple trading strategy drawn out on paper with detailed rules for you to follow.
Here, I am going to talk about how you can stop losing money and become a successful trader. We all know that before you even enter a position, you must know where you place your stop-loss order. If you don't know where your stops are to be placed then you are trading with a major disadvantage.
Your position entry is not complete without having a stop price figured out. It blows my mind why so few investors use stop-losses. If you are guilty of not using stops, you need this information. It might be the difference between retiring on time with a big nest egg or retiring later and still just churning your account.
If you plan and place stops you are planning to win, but prepare to take losses because you will get stopped out and you will have to get back up, brush yourself off and trade another day. So with that said we need to look at the psychology around taking losses because it's not easy to manage, and is the main reason individuals do not use stops. Being proved you were wrong flat out sucks!Successful traders understand they must know where they are going to be stopped out before they enter a position. They have to know ahead of time what a wrong trade looks like so they can exit it quickly. This is a rudimentary fundamental that EVERY trader knows the answer for.
Do You Have a Trading Strategy That You Can Trade Like a Robot?Can You Answer the Following Questions?
- How do you know when to sit tight or cut your losses?
- Do you have rules to tell you when to sell a losing position?
- Do you have rules to tell you when to move your stop to breakeven?
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