Sorry, I missed the word "NOT" at the beginning of this post title ...

Even the best trading systems will only be right about 60% of the time. So for every 10 trades, you will lose an average of four times. Even trading systems or certain trading setups with higher rates of return nearing 80% usually fall back to a more realistic 60% return when actually traded. This is because the rates of return on most systems tend to regress to the mean.
If you’re losing 40% of the time, you need to control risk. You can do so by implementing stops and controlling trade size. You never really know which trades will be successful, and as a result, you must control risk on every trade, regard- less of how profitable you think the trade will be. If you end up with more winning trades than losing ones, you can do very well with a 60% win to loss ratio. In fact, with effective risk control, you can sustain multiple losses without devasta- tion to your trading account and emotions.
By not controlling risk and by using improper trade sizes, however, traders can go broke in no time. It usually happens like this: They begin trading, get five losses in a row, don’t use proper trade sizes, and don’t cut their losses soon enough. After five substantial losses in a row, those traders do not have enough capital to continue. And it can happen that quickly.

Copyright 2008 All Rights Reserved Revolution Two Church theme by Brian Gardner. Converted into Blogger Template by Bloganol