39. Place your stop losses outside the range of noise so you’re only stopped
out when you’re wrong.
Find the price level for your stop loss that has a high probability of never being
hit, so you have the time to exit your trade profitably. Once you know where that
level is, you can enter your
trade when that level is near, and position size
correctly so the worst case scenario is a small loss.
Many traders choose to look for the highest probability setups to take entries, but
if your stop loss is a low probability exit, you have
a potentially great trade
because your stop loss won’t be hit, and you can let a winner run.
Get in the habit of finding low probability stop losses as much as high
probability setups.
Just like in athletics, business,
and entertainment, the top traders have spent
thousands of hours developing and successfully implementing their trading
plans. What start out as rules are practiced until they become deeper and more
meaningful; they become habits.
It takes discipline and perseverance
to reach this level of success, but it can be
done. And I promise that if you commit yourself to a regimen of daily trading
rituals, and practice them faithfully, you will be a better trader.
The purpose of this book is not to make
you adopt my trading habits, but to
show you the importance of following a plan that will empower your success. I
hope that you now feel confident about creating your own habits, and that they
help you achieve your trading goals.
