Trading stocks or commodities is one of the most complex endeavors.

What is the difference between a winning trader and a losing trader? Trading & Market Myths

When you are trading Stocks or Financial/Commodity Futures your ability to predict is not important at all. It's how you react to market action that counts.
I don't care whether it is possible or not to predict the direction and/or strength of market moves when looking at the recent price data, daily newspapers, or one of those $150 newsletters.
But price data is very useful to test strategies on. I prefer to concentrate on how I will react to price action rather than desiring to predict it. Reacting is a business decision, predicting is an ego play. So trade as if it were a business (it is a business), not to pep up your ego. Your ego tells you to win most of the time (which is impossible) and prevents you from cutting your losses short and letting your profits run.

Even if your buy/sell signals come from a flip of a coin (which is a 50/50 system) you should still make money trading as long as you risk only a small percentage (max. 2%, better <=1%) on each trade. Of course your system must have a x to 1 win/loss ratio (x >=2).

You need 4 strategies to trade successfully (chronological order - not sorted by importance):

1) How and when to get in 2) When to get out with a loss 3) When to get out with a profit, and last but definitely not least: 4) How much you will risk on any trade

On the following chart an experienced trader will see immediately when I am trading and when I am not:

Don't forget: Plan your trade and trade your plan.

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