Trading a stock market system is a lot like playing baseball. Most of the people who go all-in on the home run trade are usually not around very long. Being a successful trader is all about playing with the numbers.
The most successful operators are the hit base operators, they are quite happy hitting singles and doubles.
Let’s say you risk $100 per trade, we’ll call this a unit. If you single to first base, you’re up one unit ($100). If you hit a triple on your next trade, you will raise three units. If you strike out, you lose a unit.
You can see from the analogy above that you don’t need to beat 100% to be successful in the game. Swinging and hitting a triple will eliminate three losing trades if your losses stay within one unit.
You can’t risk one unit on one trade and three units on the next trade, you have to be consistent to be able to play with the numbers.
Successful traders know if they can hit enough singles, doubles, and triples that the law of averages will produce the odd home run trade.
If you look at professional poker players, they follow the same rules. They stay hidden, never betting big, waiting for the moment to strike.
For a trader it is base hit, base hit, triple, base hit, strike out, double, base hit as he slowly builds his account.
Don’t just swing for the fences, have a plan in place that will give you a better chance of success.
Playing the numbers will ensure that you are available to play the game another day.