The Psychology of a Winning Trader. Learning To Win Every Trade
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Markets are not machines, and neither are OTC or Pink Sheet Stocks.
They’re all extremely complex poker games. That’s why you’re never going to get anywhere if you try to think like a machine. You have adopt the mindset of a top poker player.
Bets are useful when the payoff is clearly much larger than the risk. This is especially true in markets because the odds are by definition very difficult to know in any particular bet.
And whenever that’s true, the process of determining the likely outcome has to be understood as roughly random for the purposes of your initial framing of your risk versus reward in any new trading position.
That’s why having a real or at least mental stop loss order is crucial. It’s imperative to take a worst-case-scenario understanding in with you in a new trade.
Having this in mind allows you to understand what you are looking to make on the trade as a function of a ratio to that risk. If the envisioned winnings are not at least 3 times the amount that would be lost if the stock hit your stop, then it’s a bad trade and you should leave it alone.
Making this choice, and sticking with it, is difficult. It takes extreme discipline to always honor this mentality. But that’s what it means to have a “Professional Attitude” about your trading. Otherwise, you’re just another piker shooting from the hip.
The choice is yours.
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