SUPER TRADER by Dr. Van K. Tharp Introduction:The Five Steps to - TopicsExpress



          

SUPER TRADER by Dr. Van K. Tharp Introduction:The Five Steps to Consistent Profits The goal of this book is to help people develop a full-time trading business that produces consistent, above-average profits under various market conditions. This means that you can perform profitably in up markets (both quiet and volatile), down markets (both quiet and volatile), and sideways markets (both quiet and volatile). To help traders reach this goal, I’ve designed a five-step approach. If you are reading this, you probably would like that sort of performance. My objective here is to familiarize you with the five steps you must take. 1. Work on yourself and your personal issues so that they don’t get in the way of your trading. This step must be accomplished first; otherwise, those issues will interfere with each of the other steps. 2. Develop a business plan as a working document to guide your trading. This plan is not to raise money, which is the purpose of many business plans. Instead, it’s designed to be a continual work in progress to guide you throughout your trading career. The business plan actually helps you with all four of the other steps. It also includes an overview of the big picture influencing the markets you will be trading and a method for keeping on top of those factors so that you will know when you are wrong. My view of the big picture is updated in the first issue each month of my free weekly e-mail newsletter, Tharp’s Thoughts. 3. Develop several strategies that fit your view of the big picture and understand how each of them will perform in various market types. The ultimate goal of this step is to develop something that will work well in every possible market condition. It’s not that hard to develop a good strategy for any particular market condition (including quiet and sideways). What’s difficult is to develop one strategy that works well in all market conditions, which is what most people attempt to do. 4. Thoroughly understand your objectives and develop a position sizing™ strategy to meet them. Probably fewer than 10% of all traders and investors understand how important position sizing is to trading performance, and even fewer understand that it is through position sizing that you meet your objectives. Thus, the fourth step is to develop position sizing strategies for each system that will help you meet your objectives. 5. Monitor yourself constantly and minimize the number of mistakes you make. I define a mistake as not following your rules. Thus, for many people who have no written rules, everything they do is a mistake. However, if you have followed the first four steps, you will have rules to guide your trading and can define a mistake as not following those rules. Repeating the same mistake is self-sabotage. By monitoring your mistakes and continuing to work on yourself, you can minimize their impact. People who do this, in my opinion, tend to produce consistent, above-average profits.
Posted on: Sat, 18 Oct 2014 09:01:29 +0000

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