Successful trading requires an edge. Do you have an edge? Here are some tips to get a winning Edge in trading-Successful Tips
Get winning Edge in trading
You must first set a standard for yourself. The winning percentage isn’t the only factor to consider in this case. In the long run, you simply want to make more money by being correct than you lose by being incorrect.
A Normal win rate of 80% would look like this:
- Win $200
- Another Win $200
- Win $200
- Win $200
- Lose $600
Despite having an 80% win rate, the above system still loses.
A system that has a very high potential for success:
- Lose $100
- Another Lose $100
- Lose $100
- Lose $100
- Win $1000
Even with a 20% win rate, this trading system is very successful.
You need at least 25-30 trades with rules for proper exits and entries and position sizing to get a profit to verify your method and system with wins and losses to see if your system is working properly?
Traders’ psychology: Get winning Edge in trading
If you want to gain a competitive advantage in the markets, you must strictly follow your system’s rules. If you don’t act on greed and fear impulses when trading, you’ll have an advantage over the competition. You can win if you ignore your ego and concentrate on your strategy. If you are willing to ignore your ego and not care if you are wrong, you can save a lot of money. You have the advantage when you know when to walk away from a big win.
Management of Risk
What determines whether a trader is a winner or a loser? They place a set amount of money on each trade. New traders who place random bets based on the certainty of a future profit will lose all of their trades in the long run. New traders have a tendency to greatly overestimate their accounts in order to take advantage of these opportunities. Stock selection and trade entry timing are important, but risk management is just as important. Even if they have a winning setup, new traders will lose money because they bet too much on losing trades and return winning trades they have already made.
Risk Of Ruin
New traders are frequently unaware of the risk of financial ruin. Based on your risk per trade, what is the maximum number of trades you can be wrong on before blowing up your account? To break even after losing five consecutive trades, you’d have to make a 100% return on your trades and bet 10% of your account balance per trade to break even. The size of your position and where your stop losses are placed, not your stock picks, will determine whether you win or lose.
It is possible to succeed in the markets if you have a winning method that you follow with great discipline and a risk limit of 1% to 2% of your equity per trade.
Also, Read
12 Realities of Trading For a Living
Get a winning Edge in trading