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In trading, activity alone does not make money, the right activity at the right time is what makes money. Many times the right thing is to do nothing. Over trading is one thing that causes traders to lose money. You can not make money every day in every trade. Every trade is an exposure to losses, your capital should only be exposed to risk when you have an edge. Sometimes their are set ups and sometimes there are none. Trend Followers should only be trading trends. CAN SLIM investors should only be taking break outs from cup with handle patterns or bounces off the 50 day moving averages. Chart Pattern traders should only take entries off pattern set ups. Traders have to follow the entries that are in their trading plan. Even discretionary traders should only be entering based on their rules when their experience tells them the odds are in their favor. Your entry should be putting 1% of your capital at risk with the odds being you will return $3 for every $1 you have risked.
In your trading you have to do four things very well to make money.
You have to know when to get in.
Only enter trades that have the highest probability of success and the best risk/reward ratio. Buy the best monster stocks during up trends. Short the fallen leaders when the game changes and they are under the 50 day. Buy the monster stocks at the gift of the 200 day moving average at the first few tests. Short down trending junk stocks. Go where the trends are. Only take your best entry signals. Trading is not like baseball you do not get strikes, you can wait for the pitch you want.
You have to know when to get out.
When your trade reverses through a key support get out. When the market up trend reverses get out of your long positions. When your stop loss is hit, get out. When the stock reverses and hits your trailing stop, get out. When you have lost 1% of your trading capital, get out. Money is made on exits not entries and trading accounts are ruined by not taking stop losses when they are hit.
You have to know when to stay in.
If you enter a trade with the potential to trend let it run as far as it will go. Set a soft target, trail your winning trade with a stop. Let the trend tell you when it is done running. Do not cut your winners short, the only way to win in trading is if your winning trades are more than your losing trades.
And most importantly you have to know when to stay out.
If you do not know what to do, do nothing. If the charts confuse you, stay out. If the volatility is escalating and you are losing in every trade, stay out. If you are a trend trader and you see no potential trends, stay out. If you want to go long but all the stocks you want are going down, stay out. Wait until you see patterns, trends, and good entries emerge from the randomness and chaos, until then, do nothing. The one entry that has saved me the most money is going into cash and waiting for a storm to pass.