You don't have to follow this exact example in your trading, but I believe that even if you apply only part of it, you will greatly improve your chances of survival and of ultimately becoming a member of that magical ten percent winner's club. First, a little background. Most traders seem to be more concerned with the latest and greatest method of getting into a market. Getting in is the easiest thing to do. It is interesting to note how much less is written about getting out than getting in, since getting out is just important as getting in.
Many traders feel they have made a terrible mistake immediately after having gotten in.
This order is implemented when a trader doesn't want to take a loss according to the original stop loss plan, and instead wants to risk more to see if the trade will work out. The sense of having made a mistake becomes so strong that they get back out with a small loss, or hold on, blindly riding the trade through profits to a large loss. Either way, the idea of money management is usually an afterthought. For the broker, it's bad because he has to replace that client, and that means a lot of work. It 's common knowledge over eighty percent of traders lose their money and stop trading within their first year, and that about ten percent of traders get the other traders' money, year after year.