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Here's the biggest key to successful trading: veteran trader

Here's the biggest key to successful trading: veteran trader

Video Transcript

- If you're a longer term trader, then what's going on intraday doesn't matter. And if you are reacting to that, then you're hurting your own strategy. If you are a shorter term trader, then that whole sort of narrative of what the Fed is doing in the meeting in 3 weeks is completely irrelevant, because what matters is the action today. I try to take a weight of the evidence. I try to absorb as much information as I can, and then try to weigh that. But on top of everything, it all comes down to the risk management aspect to it. So sometimes the technicals are telling you one story, other times the fundamentals are telling a different story. It's in that environment that you really don't want to trade that big, because you may think that, OK, the technicals are breaking down, but if the fundamentals are still fairly there, that's supporting the market. It's when there's an intersection between those two, that's when you can get more aggressive and take a larger position.

And when I say technicals that means if you're trading some sort of consistency where you're risking X amount of basis points per trade, most of the time we risk too much on an individual trade, and we can't have losing streaks. You have to be able to withstand losing streaks. You know, one of the things when I talk to younger traders is that records are made to be broken. But if you keep buying options, call options on some record to be broken, you're going to run out of money before it's broken. If you keep selling options to create, earn that premium, thinking that the record is not going to be broken, when it gets broken, you go bankrupt. So it's really difficult. So just to say something's never going to happen or it's likely to happen isn't sufficient. You have to have a collared risk management approach around that.