[MadMarketScientist]

"Bulls Make Money Bears Make Money Pigs Get Slaughtered" ... this has saved me lots of money e.g. this made me sell half my position in silver at before the current meltdown

MMS

[TheNegotiator]

Mad, I think this is a very useful rule when applied to heavily trending markets. However, I would also add that when a market is not trending at all and this happens much of the time short term, reversion traders who fade the market are the ones who are cleaning up. So it really depends on your timeframe I think. Long term trading I think that the rule makes more sense.

[TheNegotiator]

Hmm, I see the benefits of what you are saying here Siuya. However, I also see an issue for at least for my way of thinking. If you keep the stops small and the market starts giving you smaller profits on winners and your loss percentage increases, you end up getting stuffed! So presumably you would want to have an overall profit target threshold for a particular strategy to be employed, which would likely be a combination of win:loss ratio and risk:reward ratio. So really, there is a minimum profit target as otherwise the method would fail. So the way I see it is coupled with a money management strategy, stops and profit targets must be related.

[SIUYA]

I know what you are saying Neg. My point is along the lines combining the bigger picture context, looking to get good entries, so that you can move to BE quickly - hence minimising the losses, yet when you actually get on something, you have to let it ride...... when it comes to stocks, there are often those things that are ten baggers that pay for lots of small losses. eg; apply this in simple maths to FX. Lets say you apply this and get it wrong 10 ten times, and loose .10 of a cent each time. You only need to get it right once to cover that - if you can get those 10 losses mainly to break even quickly then this increases your odds. However the next trick is to then run those winning trades.
Admittedly this works best for me as I have multiple instruments, and enough money to run opens. This also requires a way in which to keep putting on trades, building positions and being able to keep taking the opps when they occur.....this has been a bug bear for ages and ages for me. Trying to cover too many positions, ideas and trades requires computers - or lots of focus.
These methods all stem from my days as an option market maker who trades long volatility - every day you would have your time decay to cover, you would trade around trying to get this to break even (ie; covering your costs) and then every now and again trends would develop OR a big move would occur that made you money.

But I think this also can apply to many who trade shorter term as well. It seems there is always that trade off between entry timing, missing opportunities and how big a stop should be......and then relating this to a target adds a whole other dimension, and my thoughts on the matter (and I think that its possibly also the fact that I am terrible at expressing these thoughts on paper) is that the best thing to control is your intitial entry and exit, and then why add the extra element of something you have no control over, is a best guess (possibly based on past stats maybe - or back testing). I would rather give myself the opportunity, than limit myself.
(thats also not to say that you cant run profit taking systems in conjunction)

[GCB]

1. No contest. Cut your losses short. You have to learn the right way to lose before you can learn to win.
   
2. Second would be follow your plan, and it's complement, no impulse trades.
   
3. Third would be don't chase, wait for pullbacks.

[tradeemini500]

2 trading rules have saved me the most money:

1) Only trade when the edge is present
2) Once the edge is present, stick to the trading plan

[TheNegotiator]

GCB, the simple ones are always the best! But the simpler they are, the harder some people find they are to follow. You have to see and understand why they are important rules. Essential rules in fact.

Siuya, I agree and you are pretty clear with your posts btw! I guess it just depends on what your style is as to how your profits relate to either each trade or your account.