Now that we’ve all gone through the ritual of making and then almost immediately abandoning our New Year’s resolutions for the 18th year in a row, there may be a more appropriate self-improvement project to consider: humility.
“Whenever I enter a position I have a predetermined stop. That’s the only way I can sleep at night. I know where I’m getting out before I get in.”- Bruce Kovner
When you enter a trade a stop loss is the exit tool you use to know when it is time to get out of the trade because you are losing money. A stop loss is the tool you use to prevent a small loss from becoming a big loss. This is one of the most important elements in your trading as big losses are the primary driver of unprofitable trading.
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” – George Soros Looking at the below chart you will see that the bigger your wins are versus your losses the lower your winning percentage can be and you […]