You are now familiar with all the technical tools required to trade commodities, such as Candlestick Patterns, Chart Patterns, Support & Resistance, Trend Determination and Chart setups. However, that is not enough. It is like having a great car with perfect driving conditions, but not knowing how to drive. How would you ever reach your destination?
For example, the technical tools do not tell you :
How much trading capital you would need?
How many lots do you need to trade for a certain amount of trading capital?
How do you limit your risk to an acceptable amount?
What is that acceptable amount that you can lose?
How to book profits at regular intervals to keep your morale high? How much?
What are the time tested trading rules that you must adhere to?
All the above would be covered under this series of posts that we call as STRATEGY - the second pillar of our Trading System after setups. Strategy deals with Money Management, Risk Management and Profit Maximization. It is absolutely critical to internalize and practice this if you were to make a professional trader who makes consistent money from trading the markets.
Before starting with Strategy, we would want to make a critically important point. Many traders fail because they do not understand this basic logic. You do not want to be one of them.
Trade only with money you can afford to lose. Your trading capital should be only money you are willing to lose. Never trade with money that is needed for normal living. Never trade with borrowed capital. You cannot trade well with 'scared money', it will influence the mental freedom needed for sound trading decisions.
Please click on "Next Post" to know the basic rules of limiting risk by defining your Max Loss and Max Exposure - Money and Risk Management
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