Wish I learned this first when I first started

Tradesurfer

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For anyone who is trading/investing, it is so important to first develop your plan. Quite often we start with trying to figure out what to trade? What will go up and now!
But really the key to becoming successful as a trader is to have answers to the following.
How much will I allocate to my trading?
What will I risk per trade?
What will I be trading?
How will I decide when to Enter?
How will I decide to Exit? (both to capture profits and prevent large losses)
How will I calculate the proper entry and exit points?
How will I measure success?
After teaching trading and investing for over 15 years, I continually stress these very points. Another key aspect is being wrong. Really good traders who try and capture trends are probably only correct at best 50% but more likely only 35%-40% of the time. What matters though is keeping your losses small and letting your winners run.
Now to illustrate how wrong with the proper money management a trader can be consider this:
10,000 dollar account and risking no more than 1% on a trade. Out of 10 trades you had one that trended and made 10 percent which happened to be the last one (equity had eroded on the first 9 rather than 1st trade being a winner). All others were 1 percent losers. (rounded up or down on all)
Acct Value Loss/Gain Trade#
10000
9900 -1% 1
9807 -1% 2
9703 -1% 3
9606 -1% 4
9510 -1% 5
9415 -1% 6
9321 -1% 7
9228 -1% 8
9136 -1% 9
10050 +10% 10
This is a 10% win percentage but the trader kept losses small and winners run and was +50 dollars. Too often we hold our losses only hoping to get somehow

As I said, too often we start with the excitement of trading and benefit from developing a plan first and money management is SOOOO important.

Good Luck everyone!!
 
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