Ever suppose how casinos in fact work and save cash?
Casinos rake in a ton of batter every last day, in spite of the way that casino drivers cannot conjecture with sureness which individual can be a sum noob and part 5s in opposition to a dealer demonstrating a 10, or who will strike it rich playing opening machines.
How is this feasible? Shouldn't non-haphazard conclusions advance to reliable benefits? Then again if that would be the situation, shouldn't erratic conclusions advance to conflicting benefits?
Casinos are ready to unvaryingly produce benefits for the reason that they comprehend that for every recreation, the casino has an EDGE over the players. They perceive that as time marches onward, plausible results can in fact handle unvarying and predictable consequences, given that the example size is extensive enough.
Quite similar to a casino, traders are in the business of attempting to be constant and acquiring cash in an apparently haphazard work nature. The nexus is to think in terms of probabilities.
This is in fact much more effortless stated than done, resulting from the fact that it needs a few layers of conviction that you could at first think could not venture to coincide.
The principal level is on the micro, trade-particular level.
At this stage, you need to perceive and receive the lack of determination and flightiness of every trade.
Let's go back to our casino example and use everyone's favorite game, blackjack. While playing blackjack, you never know what cards you'll be dealt, nor do you know how each player will play his or her own hand. These factors have a direct effect on the outcome of your hand.
And yet, there are some who make money playing blackjack because they understand that each hand is STATISTICALLY INDEPENDENT of every other hand and that over time, if they follow basic strategy, they can decrease the house edge and actually generate a small profit.
The same is true for trading. We have to understand that each trade is independent of every other trade. Whether you won or lost the previous 10 trades has no bearing on the outcome of your next trade. Once you accept this, you can easily take trades without being adversely affected.
The second layer of belief is on the macro level. You have to understand that over time and with a large enough sample size, the probability of profit or loss is relatively certain and predictable. This degree of certainty is based on the constant variables that are known in advance and most importantly, within YOUR CONTROL.
Once you recognize the independence of each trade and believe in letting good odds play themselves out, then you'll have an easier time at removing emotions from your trades.
For example, you're less likely to exit a trade early if you know that your trade idea has a good probability of winning in the first place. Similarly, you're less likely to fuss over the outcome of each trade if you know that given enough sample size, your trading method will most likely work out in your favor.
But before you place too much confidence in your trading method, you must first make sure that it has an EDGE over the markets. We here at BabyPips.com have been ranting about having an edge because IT'S THAT IMPORTANT. Without an edge, you are just like any random fool who walks into a casino - yeah, you might win once in a while, but over time, the casino will win because they have the edge over you.
The key to having an edge isn't found in paying billions of dollars for a "risk-free system" that can "guarantee profits." In my hundreds of years of trading, I have found that the best traders find their edge by constantly looking for opportunities and tirelessly putting in the muscle work needed to fine tune their trading styles and methods.
Bottom line is that the consistently profitable traders don't rely on luck - they rely on the knowledge that their system works because they have put in the necessary efforts to make it work.
0 comment(s):
Post a Comment