What You Don’t know Can Hurt You
Here’s a little section of the book that will ruffle a few feathers. If you ever hear that I’ve gone missing under mysterious circumstances, it’ll probably be due to of the contents of this chapter.
These next few pages aren’t intended to scare you, but to educate you to some of the realities of the trading business. I want you to know about the pitfalls that are lurking out there, waiting for the unsuspecting and the uninitiated. If I can keep you on the right path and prevent you from being drawn into these traps, your chances of success will increase dramatically. To be forewarned is to be forearmed.
You will often hear of spectacular returns. You will hear salespeople bragging about 90 percent winning trades, 95 percent winning trades, and so on. You will hear claims that it is possible to win many consecutive trades on a consistent basis.
And what could be wrong with winning? It feels good to win, right? Well, the salesperson who is trying to sell you a product or service that promises such a high percentage of winning trades (or in some cases promises a ridiculous number of consecutive winners) is counting on your desire to win to short-circuit your thought process.
It is easy to obtain 90 percent winning trades and still lose money. Conversely, there are many successful traders who place more losing trades than winning trades. The percentage of winning trades has nothing to do with the ultimate success of the trader. Most references ...