Category:Trading

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«First study science, and then follow with practice established by science.
Those who fall in love with practice without science
are like pilots who enter the ship without rudder or compass.»

(Leonardo Da Vinci)


To a trader, fear becomes a primary crippling factor. A trader who is afraid of declines will not see increases either. In a worse scenario, a trader will replace the faculty of observation of a real change with hope, then prayers, ultimately with resignation. Controlling the risk should be the first trader’s thought, not the prediction of the future.
Often, behind a joke, hides a great truth. With just a few words, Woody Allen reveals the best way to double your money stating, «The safest way to double your money is to fold it in half and put it in your pocket.»

Personally, I don’t know of any other system that can double your money without risk.

Rather, there are many proven systems to halve our money without the "risk" to double it; roads so wide and luring, constantly taken by aspiring traders in search of magic formulas or secret techniques.

Who is about to lose money for the first time does so fearlessly as he has no clue about the risk he is running, it was not in his forecast, and he has no knowledge on how to limit the damage systematically, created by his own ignorance.

Trading requires planning, not for gaining but to avoid the "big loss", the atypical operation that unexpectedly paralyzes you, takes your breath away, stops you from closing a trade that you very well know, it has to close.

A great loss destroys money, mortifies the Ego magnified by illusions and fake knowledge. The hope for recovery replaces what eyes should clearly see: you are on the wrong side of the market!

Following five P perfectly summarize the concept:

Plan
Precedently
Prevention
Perilous
Performance

Many traders wrongly believe that scalping and intraday operations are low risk, have few pitfalls and almost no risk to encounter ruin that wipes them out. That is untrue. A small mistake repeated dozens of times creates as much damage as a big mistake. You have to plan, establish operating rules you will respect, then draw up a protocol and, above all, follow it!

Notes:

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