≈ Beware the short run≈
Randomness is a tricky devil. He causes you to either think you’re a genius or a fool when the truth is usually somewhere in between. The worst trading systems score the occasional winning streak, and the best trading systems suffer the occasional losing streak. When you’re in the middle of the streak, it’s hard to judge the actual merits of your system or set of rules.
Instead, keep going. Give it time. Make it to the long run. Along the way, randomness dies off. The law of large numbers kills him. What remains is the true measure of a system. If it’s a quality set of rules with an edge and proper position sizing, then profits will eventually stream in. If it’s a shoddy system with no edge or poor risk protocols, consistent losses will come to the fore.
Sadly, many traders put too much pressure on themselves. They trade too large of a position or read too much into their first few trades. What they should do instead is trade small and trade often. Rack up a large enough data set. Keep track of it using the Tackle Trading Journal. Then, after dozens and dozens of trades – it’s judgment time.
Chart of the Day
Can Tech Break Out?
The technology sector is hoppin’ this morning, directly into the top end of its recent range. Is the seventh time the charm? Can XLK finally blast through resistance? Time will tell. If it does, a return to its $143.77 peak could be in the offing.
Video of the day
Buy One, Hold One Dump One
Coach Greg presents 3 stock ideas from Industrials – $ADP $ITW and $ETN – and Coaches Tyler, Tim and Cody have to decide to ‘Buy One, Hold One, and Dump One’ in this segment from Thursday’s Cash Flow Club
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At the Closing Bell 3:00 PM EST
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