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Paying your Dues when Trading

Paying your Dues when Trading

How many of thought upon reading Market Wizards, I can do this? Probably most! The sad fact is that more than 90% of all traders fail. Fail means blowing up an account. Losing all of their money.

It is not just us mortal traders. It is PHDs and Noble Prize winners.
Long-Term Capital Management L.P. was considered too clever to get caught in a market downdraft. The Greenwich (Conn.) hedge fund nearly tripled the money of its wealthy investors between its inception in March, 1994, and the end of 1997. Its sophisticated arbitrage strategy was avowedly ”market-neutral”–designed to make money whether prices were rising or falling. Indeed, until last spring its net asset value never fell more than 3% in a single month.

Then came the guns of August. Long-Term Capital’s rocket science exploded on the launchpad. Its portfolio’s value fell 44%, giving it a year-to-date decline of 52%. That’s a loss of almost $2 billion.

The list continues on and on. From one of the famous turtle founders to John Henry. One must pay their dues when trading. There is one word which resonates.

Commitment…

Learn how to trade. Learn how much risk per trade to put on…Learn about correlations..Learn about portfolio risk…Even with all of this said…There will still be loses and losing periods. This is were the psychology must come in and a strong dose of commitment…

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