Here are ten quick and easy steps to making sure your trade has the best chance of being a winner:
- Your trade entry must be at a price level that gives you either a high probability profit potential or a great risk/reward ratio.
- You must identify where price has to go to prove you are wrong and then set your stop at that level.
- Your position size has to be based on how much you are willing to lose if your stop is hit. 1% to 2% is the maximum loss of total capital you should ever risk to avoid the risk of ruin.
- If your trade becomes profitable you will have to have a plan for a trailing stop to lock in profits on a reversal or a price target to lock in profits when it is hit.
- Your trade must be based on a detailed trading plan. You must operate inside a set of rules.
- Your trade must must be made inside a profitable trading system to have any long term meaning.
- Trades must be based on reacting to what is happening not predictions.
- Trades must be based on quantifiable facts not emotions or ego.
- Always trade based on your own time frame.
- Never piggy back another persons trade. All of our trades are our own win or lose.