Don’t think in terms of predicting the market, focus on probabilities

Rookies in the market want to be able to predict what the market is going to do. In contrast, savvy technical traders focus on probabilities of market trends. These traders may be called market timers or technicians of the market but whatever name they are given they follow a system and they think in terms of probabilities of an instrument going up or down.

Traders who think in terms of probabilities have developed a discipline for identifying when the odds of a trade going positive are higher than going negative. They base their decisions on certain developments and accept whatever the outcome. Since they are not focused on the outcome of one or two trades, they win in the long term because emotions do not interfere with their decisions. They are in for the long term.

The market is an unstructured environment that is constantly changing. It offers plenty of opportunities with a great deal of risk attached to it. Greed and fear move the market up and down. Risk control is of the upmost importance for trading any financial instrument. Participation in the market as an investor/trader requires that some form of risk control mechanism be in place. Using stop-loss/stop-orders in a trade is an important mechanism in order to stay in the trade and ride the market trend.

 As long as the ratio of the winning trades are at least double the losing trades you will win in the end.