Saturday, September 13, 2014

TIME DOES NOT DECIDE WHEN AND HOW MUCH MONEY YOU WILL MAKE

We set out with a clear goal that we want to earn 10000 rupees a month and deploy Rs 100000 as capital. Will we meet our objective?


The answer is No!! Confusing again?

What you make or lose in each trade is a function of your capital deployed, the capital deployed each trade, the risk that you take and when do you decide to exit your trade.


Once you study your trading pattern and the actual profits that you are making, you can test and scale up your parameters - capital and capital/trade.
Most of us have ideas about the amount of time it takes to make a certain amount ofmoney. These ideas do not apply to trading the markets. You can win and lose in minutes, because of big moves that happen in your trading direction or against it. 


But you can study the patterns of your particular trading method and calibrate and adjust them so that you can meet your trading goals.That is capital deployed per trade and your trading discipline so that the trading method can be scaled up (or down).Remember that you can have 2 winning trades followed by a losing trade or sometimes no trades for a long time, based on your trading method. A trade may complete and meet your target in 5 minutes or 2 hours. There is no way of predicting when the trade will complete. 


Do not attribute any emotions to the way the market treats your trade or how quickly/long it takes. The only outcome that you can control is the losses that you suffer in a trade and the time when you exit a winning trade. Thats it. Follow the discipline of the method that you have decided to treat these two outcomes and you will have consistent results.


Remember, acting in your own best interest to protect yourself is much more important than finding winning trades. Don’t get caught up in thinking the market must keep going if it moved this far, this fast. It doesn’t have to do anything, no matter what it just did. Keep yourself prepared for whatever it does and you’ll have a much better chance of holding onto your profits.



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