Trading what you see, 3

cont'd discussion about Trade What You See: How To Profit from Pattern Recognition (Wiley Trading)

The chapter on Trade Management is excellent. The authors say that the first step in refining trading as a skill is to learn a method of trading that suits one’s personality. The authors stress the need to regard trading as a series of events in which there will be winners and losers, but that the order in which the winners and losers occur is unknown and the amount of profit in the winning trades cannot be known in advance. What you can know in advance is how much you are willing to lose if the next trade is a loser.

The authors suggest:

Risking only a very small (less than 3%) of your capital on each trade.
Always using a stop loss.
When profits manitfest, taking at least partial profits using a limit exit order/

...cont'd tomorrow...

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