People are always looking for the ‘real’ secrets of trading success, but mental biases have them looking in the wrong places and at the wrong things. Consequently, they search for great entry systems that they think will help them pick the right stock. Picking the right stock has nothing to do with success and neither does the accuracy of your stock picking.
All of the great traders, featured in the famous Market Wizards book by Jack Schwagger, agree that the key ingredients to your success are:
(1) The golden rule of trading (cut your losses short and let your profits run);
(2) Position sizing (the part of your trading system that tells you how much); and
(3) The discipline to do both.
The golden rule of trading describes exits—abort losses, and ride winners. In our trading simulation profit trainer, position sizing controls how much equity you risk on any given trade.
“Let me be clear about what my research has proven to me:
Picking the right stocks has nothing to do with trading success and neither do amazing trading systems with high percentage wins.
The secret to winning trades is proper position sizing strategies” — Van Tharp
Congratulations, you are making progress toward understanding this complex topic.
Later in these lessons, you can download the profit trainer. The first three levels are free. It’s important that you understand R and R-Multiples to truly benefit from the unique profit trainer tool.