|
You spot a head and shoulders chart pattern. You’ve learned it’s a bearish pattern—so you go short. Then BOOM, the market collapsed lower, and you made a nice profit. A few days later… Another head & shoulders pattern formed. So, you go short again. But this time the market rallies higher and you got stopped out. Or how about this… You buy a breakout. Sometimes you make money, and sometimes you lose. Now you wonder to yourself… “What’s going on? Why does it happen?” Let me explain what's actually going on (and why the market isn't plotting against you, even though it feels that way)… Trading is about probabilities (never certainty) The fact is this… No matter what trading strategy you use, you’re guaranteed to encounter losses. It doesn’t matter if you’re a systems trader, price action trader, day trader, or even if you sacrifice a goat to the trading gods every morning—you will face losses in your trading career. For example, if you have a 70% winning rate, it means you’ll lose around 3 out of 10 trades. But here’s the thing… You can’t predict when your losses will come. It could be:
That’s why trading is about probabilities, never certainty. Moving on… “How do I know if what you’re doing is correct?” You must use data to guide your decisions For many traders, they trade based on their emotions or rely on gut feel. And if you look at their results, 99% of them lose money trading with this approach. So if you want to be in the top 1% of traders, then you must use data to guide your decisions. This allows you to know whether your trading strategy works, the types of market conditions favourable (or unfavourable) for your strategy and realistic expectations for your strategy. Now... If you want to adopt a data-driven approach to your trading, then join me at Stock Trading Secrets. You'll discover data-driven strategies to earn a second source of income—without relying on gut feelings, crystal balls, or asking your pet for trading advice. Sign up here. Cheers, Rayner "the-data-driven-trader" Teo |