The Importance of Having Fewer Losing Trades

If your aim is to really make your money work for you, you need to be able to increase the size of your trades as your account grows. If you continue to trade just one or two contracts or hold small size positions, you are not leveraging the ‘magic’ of compounding returns. To increase your position size, which is a prerequisite to growing your account size, it’s critical to improve your ability to have fewer losing trades. 

Having Losing Trades Is the Cost of Doing Business as a Trader

If you want to make money in the market, you need to be in the market. But it’s impossible to trade with 100% accuracy. You are bound to have losing trades. It’s the cost of doing business as a trader. However, it is possible to minimize and control one’s losses, and that is the key to making trading profitable. 

How to Minimize Losing Trades

One way to have fewer losing trades (also known as a higher profit factor, high winning rate, etc.) is to make trading decisions based on AbleTrend Guidance charts. AbleTrend rules help us reduce the number of losing trades by keeping us out of low probability trade setups. Here is an example in IBM:

As you can see, in the summer of 2016, the AbleTrend Guidance Chart helped us to filter out a low probability trade. We made no trade at that time because of a conflict of colors between a large red dot and a blue X – a setup that typically results in a losing trade. AbleTrend trading software continuously tests market support levels, and only when the blue buy signal is confirmed with a blue X can we take a high probability and low risk trade with confidence. That’s what we call a ‘super sweet spot.’ Here are two more examples of where AbleTrend Guidance charts kept us out of low probability trades:

Having Fewer Losing Trades Empowers You to Hold Larger Positions on Your Winners

You could make more money on higher probability trades if you traded larger positions, but you might hesitate to do that if you have just had a losing trade. There can be a psychological element where a losing trade may influence you to have a smaller position on the next trade, which in many cases could be big winners. A lower loss rate could encourage you to increase your position size, and therefore increase your profit potential.

AbleTrend Guidance Chart Rules Are Simple and Consistent

AbleTrend Guidance Charts consolidate all the market information into clear trade signals that are simple and consistent, so that you can easily learn and master a skill that will serve you well throughout your trading career. 

Get Prepared Now for the Upcoming Market Trends

President Trump’s pledge for “phenomenal” tax reform pushed stocks to record highs. This is good news for traders because nobody can win when the market doesn’t move. But how do we recognize real moves from short-term blips? AbleTrend Guidance Charts help you filter out false trading signals in choppy markets. When a real market trend begins, AbleTrend trading software will quickly identify it with multiple time-frame trend alignments, allowing you to trade in harmony with the “Smart Money.”

With Warm Regards

Grace Wang

AbleSys Corp.

Gracezh@ablesys.com

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