Trade With The Probabilities
It is natural for us to try to find certainties in whatever we are doing
. We have been attracted to trading by claims of very high returns, guaranteed. You will soon learn that there are no guarantees with trading. It is just impossible to guarantee a result trading in the markets, no one or system can do it.Where the market is going is not know by anyone. When the market will move is also not known by anyone. The best we can do is to realize that we are playing in a game where we need to use a strategy that over a period of time will return a profit.
To trade successfully, we must trade the probabilities. Successful traders know that it is not possible to know what the result will be of each trade. Each trade is really only a best guess as to the direction of the market and the stock that we are trading. It will work if you trade consistently and stick with it over time. If you trade by the rules and the strategy is sound it will likely make a profit.
It doesn't matter if the strategy that you are using is mechanical or discretionary, it needs to incorporate rules that assess the current trading conditions. The system or strategy needs to work out if the general market conditions are bullish or bearish. It needs to assess the situation and through the use of questions or conditions, determine what is more likely to happen. The system needs to work out if there is a trade or if it is best not to trade. If the conclusion is to trade then it needs to understand the likelihood of one trading outcome developing over another.
To trade profitably, you need to have the discipline to trade and understand the probabilities. It is knowing that the result of each individual trade cannot be predicted and is unknown. The successful trader will trade through losses, treat them as an expense and know that over the long term, if the strategy is well researched and tested, it will return a profit.
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