Wednesday, August 5, 2009

Better odds

I am a directional trader. I'm either bullish or bearish. When I enter a trade I must be right as to the future direction of price.

When you think about that the odds are roughly 50/50, or a little less since price can also just move sideways. I'm also a short term trader (2 weeks is a long time for me).

If the odds were always around 50/50 my net return would be determined on the performance of each individual trade. The net return could be good or bad depending on how good I am at exiting a losing trade.

The one thing I know about trading- it is a numbers game pure and simple. The more I trade the more I expose myself to limited risk and unlimited reward (again, if I'm good at taking profits and exiting losses).

Does it make sense that if I'm reasonably good at reading market dynamics, sector rotation, industry demand, chart reading the candles and indicators and am patient in stalking a trade that I can increase my odds?

Yes, it does increase odds and probabilities and that's all I can ask for from the stock market.

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