Excellent investment risk management
Control the things that are actually in your hands. Most prominent of all is investment risk management. Develop a game plan for investment risk management that will enable you to master the markets and control your wellbeing.
Who knows if the market will go up or down? How much will it move? And for how long a trend will continue? In reality, investment risk management is the only real thing you have control over. That's why it's so vitally important to your trading strategy.
The perfect Indicator
Sadly there are no entry criteria that will pick winning trades 100% of the time. As you're about to find out, it takes more than a good entry to make money in the market. Nevertheless, most novice traders undertake a determined search to find the perfect indicator(s) that will lead them to trading success. Even though this may sound far fetched, I too have searched for the silver bullet to slay the market.
So why do almost all market traders search for the perfect entry? I believe the reason is a subconscious one.
Focusing on an entry point gives traders a false sense of control. The point at which you have chosen to enter the market is the point at which the market is doing exactly what you want it to do. This can create a sense that you are not only controlling the entry, but the trade itself. Unfortunately, this couldn't be further from the truth. The market is going to do what it's going to do - it doesn't care for your well-thought-out entry criteria.
Repeating what I said just a moment ago, investment risk management really is the only thing you have control over.
In Jack Schwager's book Market Wizards, Schwager interviewed some of the world's top traders and investors, nearly all of whom emphasised the importance of money management. Here's a few of my favourite excerpts:
'Risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half.' - Bruce Kovner
'Never risk more than 1% of your total equity in any one trade. By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical.' - Larry Hite
'You have to minimize your losses and try to preserve capital for those very few instances where you can make a lot in a very short period of time. What you can't afford to do is throw away your capital on suboptimal trades.' - Richard Dennis
Learn from these gurus and start to master investment risk management to prosper in these difficult times.
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By David Jenyns 
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