Originally Posted by TTUPP

i personally use a system that allows the greed and fear to be removed from the equation completely. Sounds complicated, but it really isnt.

using a predetermined stop just below a strong support level is one way to alleviate the fear of holding on to a losing position too long. this is probally the most common mistake made by new traders.

Greed can be circumvented by taking profits. selling half at a double completely eliminates all risk. for those of us not lucky enough to find one baggers or more, a more conservative approach is selling thirds at key resistance levels like Pivot Points or round numbers. When these portions are taken off, the stop should be moved up accordingly to the entry point to eliminate further risk, and lock in profits.

The second aspect of the greed equation is position size. We are all guilty of taking a huge position on something that seems like a sure thing. Trading isnt like Vegas guys! A draw-down of 25% or more would do psychological damage to anyone, and creates a prospect theory bias that may not be overcome. your account size and stop distance from your entry point (potential full loss), will determine your position size. also, a predetermined level of risk per trade should be used (2-5% of the account size) for the potential full loss. These three criterion will allow you to calculate your size to put on that will only, for example, have you draw-down 2% of your entire acocunt is things should go awry and you get stopped out.

Using these two tips will certainly help any trader beginner to pro. If anyone is unclear about how to do either of these please ask and i will explain the position size calculation. i had a hard time at first too.