Here is some advice as to how market participants can make the best of any situation and increase
their profits.
+ Profits developing reluctantly need not be a sign of an imminent loss. Similarly, losses arising slowly
are not a sign of an imminent profit.
+ The longer the forecast period, the less reliable the forecast, as the probability that new events may arise after the position has been entered, increases with time.
+ Look for information, which runs counter to your commitment. At the same time, question information that confirms your original decision. Traders and investors tend to overvalue information that agrees with their own ideas. There is also a tendency to suppress, even ignore, information that does not fit one’s personal image of the world.
+ News that is easily accessible for you is usually also easily accessible for other actors. There is
every likelihood that the news is already reflected in the market price.
+ Do not respond to every bit of news you hear. Keep your eye on the big picture, on the basis of
which you have to make your decision.
+ Assume that analysts set most forecast bands too narrowly. Compare actual bands on the basis
of historic price data for a currency, stock etc. over a specific period in order to arrive at more realistic values.
+ Similar analyses from several sources increase the confidence that the forecast is right. Assume
that opinions have usually been compared. A stock that is recommended ten times over is not necessarily ten times as good as a stock that is recommended only once.
+ If the majority of market participants expresses a unanimous opinion, then they will normally not find enough opponents to realize the resulting profits.
+ Determine a price target and a stop loss before each trade. Make sure that the target profit is approximately three times as large as the amount that you are prepared to risk. Do not set the stop
loss too low: give the market some space to breathe.
+ Keep your trading volume as constant as possible. The trading volume must on no account be increased on the basis of a series of successes, nor should it be reduced by a large amount after a negative series.
+ Never liquidate a position because you are loosing patience or becoming increasingly fearful while waiting for a profit.
+ Do not waste time on unprofitable positions because this will lock up your money, which you then cannot use for other, more profitable transactions.
+ Do not underestimate any possible foreign currency risk accompanying trading and foreign
securities.
+ Remember that there are no friends in the financial markets. There is only the short-term community with shared solidarity of those who collectively will not admit a loss.