Take Only What the Market Gives
Submitted: 24 Jul 10 17:06
 

Every single trade has a probability of success that is typically unique to its setup. Based on the observation of market behavior over a significant period, each trading signal has an optimal rate of success based on a pre-determined profit target. It is thus senseless to push this envelope without any basis.  One of the most common mistake made is when a trader lost a couple of trades using the system, another signal comes along  and he wants that final  trade to cover all the losers by increasing the target on demand. By doing that, the trader has upset all the research done as that decision is not sound in terms of probability. Rather than covering part of the loss, he could be adding to the total loss of the day. As the saying goes, you take what the market gives, and not ask for what you want from the market.