For the last 2 weeks, I got stopped-out from my Simsci shorts.

This morning, I took profit from my short AUD/USD trade prior to the RBA rate decision; and made enough to cancel out the losses from my recent Simsci missteps.

The 2 mantras of Trend Following’s money management are:

  1. Keep losses small

  2. Only losers average losers

Small losses can be even out by small winnings.

If we limit ourselves to not suffering no big losses, that means we are left with big winning trades. No?

If not, how do you think I doubled my trading account the the year before, and tripled it last year? You mean you believe I never made losing trades? Don’t tell me you believe in dragons and phoenixes hor!

Tip: Many newbies (whether investor breed or trading pedigree) often like to ask gurus: “How do you find winners?”

When they should be asking: “How do you limit your losses?”

If you pause and think about it, isn’t that’s how you “verify” whether that guru you are asking got “substance” or not?

I mean any idiot can also make winning trades – just look at the testimonies that these gurus share about their students’ winnings. (I stress again it’s students OK?)

Only then perhaps you can understand this quote from George Soros:

“Its not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”

 


Singapore Man of Leisure (welcome to my blog; just google it!)