Trend Trading is the science of measuring the direction of today’s trend, taking a position on that basis and then allowing Law of Inertia and probability favor the continuation of that trend for an unknown period of time into the future.
We do not have to worry whether the Nifty is going to go to 1000 or 10,000. It is similar to steering a ship in the direction of the prevailing wind. When the economic weather changes, we will change our course with it. We will not under any circumstances try to forecast the future time or place at which the wind will change.
Trend traders have a systematic plan. That plan includes knowing that they will not win every day, week, or month.
One question I always get from my subscribers is when they see 200 points open profits turn into say 50 points and me exit a trade. For example I go long in Nifty at 5000...Nifty goes to 5200...but my system generates an exit at 5050.
Now if I exit at 200 profit I will never see the big ones...which are the ones that actually make the year.
So trend trading is a game of patience and discipline.
Tuesday, February 2, 2010
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