Tuesday, January 3, 2012

Defining Setup criteria by Sean Seshadri

Defining Setup criteria by Sean Seshadri

Every trader should have a set of defined rules that work consistently in all kinds of markets such as bullish, bearish, sideways, and highly volatile markets. They should have a defined loss amount that they are willing to take if a trade goes against them so that one trading loss should never affect their own account to an amount that prevents from trading soon. Trading is no different then any other kind of investment like business, real estate, or a franchise. It should be treated the same with the rigid discipline that which a successful business operates. We should have an exit for profit, and a stop loss where we are willing to be humble and say to ourselves we are wrong and take the loss thereby admitting we were wrong in our prediction. Small losses become huge losses when traders lose that control. Your real expenses as a trader are your internet, computers, monitors, and losses that will happen. Make sure when you analyze your last 100 trades that the losses you are taking are less than your wins. You can go further and see the ratios between the two, and find out what percentage of trades are you correct on.
This will give you a good insight into how good or bad you are. Remember you should never trade real money if you can't show consistency on a virtual account.

Sean Seshadri

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