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Know to ‘No’

December 19, 2008

Traders must have an innate sense of discipline and self-awareness to understand when are the losing the edge of objectivity from their decision making systems.
Often this happens when you are in a string of repeated losses and slowly the objectivity is lost. This level varies although.

For a trader with a large risk appetite it might never come, if he uses appropriate SL. Playing on the numbers, the trader can expect that after an ‘x’ number of consecutive losses he can ‘expect’ to come back. So if he has appropriate risk percentage per trade and that is less than he can maximum take without any heartburn, he can come out better.

So the lesson:
1. Have a large account. This will give you staying power.
2. Have a large account. This will dampen the emotional swings
3. Maintain quality of stop loss. Keep it big enough to prevent you from being thrown away by wriggles, yet small enough to stay in the game.
4. And the most important, if you dont have a large account, then you should be able to hold yourself and prevent from entering revenge trades.

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