Investing or Trading is a Probability Game

Beliefs and Values for Trading Success

Over the next few months we will discuss important beliefs or values of successful traders to help you improve your trading and investing. If you work on a new belief each month, you'll soon be on your way to trading success.

Number 2 - Investing or Trading is a Probability Game

Investing is a probability game and nothing is certain. It doesn't matter how much supporting information you have for your trading decision, it is still just a probability. If it was possible for absolute certainty of an up move, then there would only be buyers (and no sellers) in the market and no trade could take place. Once you realize this, then it is easier to accept your losing trades without going through the emotions of accepting that the trade was wrong and you must get out of it.

Successful traders know that they have to identify a probable trend direction with an acceptable risk. Once this is determined, they take the trade using sound money management to protect their capital.

Risk management and money management are vital in trading to protect your capital and stop the stress that arises from the uncertain outcome of a trade. If you don't have good money management then this stress will affect your decision making. When you accept that trading is a probability game and you manage your risk, then trading becomes profitable and enjoyable.