You've familiarized yourself with essential technical tools like Candlestick Patterns, Chart Patterns, Support & Resistance, Trend Determination, and Chart Setups. However, knowing these tools alone is akin to having a great car and perfect driving conditions but not knowing how to drive. Without understanding how to use these tools effectively, you'll struggle to reach your trading goals.
The Missing Pieces in Technical Trading
Technical tools do not address several critical aspects of trading, such as:
Trading Capital: How much do you need?
Position Sizing: How many lots should you trade with your capital?
Risk Management: How do you limit your risk to an acceptable level?
Loss Tolerance: What is an acceptable amount to lose?
Profit Booking: How to regularly book profits to maintain morale? How much should you book?
Trading Rules: What are the time-tested rules you must follow?
Introducing Strategy: The Second Pillar of Our Trading System
This series, focused on Strategy, will cover Money Management, Risk Management, and Profit Maximization. Mastering these areas is crucial for becoming a professional trader who consistently profits from the markets.
Before diving into Strategy, understand this fundamental principle: Trade only with money you can afford to lose. Your trading capital should be money you can afford to lose without affecting your daily living. Avoid trading with borrowed capital. Trading with 'scared money' compromises the mental freedom necessary for sound decision-making.
Ready to learn the basics of limiting risk by defining your maximum loss and maximum exposure? Click on "Next Post" to learn about the essential rules of Money and Risk Management, helping you build a strong foundation for successful trading.
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