Accept The Risk

Is the money you risk on each trade real for you? Do you really accept the amount of money you are risking and are you willing to let it go? I find it helps me to think of risk as the amount of money I’m willing to spend to find out whether my edge is going to work on this trade. Note that I say spend. I actually think of each trade as though I’ve purchased a lottery ticket. I think that the amount of my stop has already been paid to find out if the edge works, so that as the trade proceeds I’m not afraid to lose anything. This is why the first point about knowing your expectancy is so important – if you trust your expectancy over a series of trades you don’t have to be afraid of the outcome of any single one.

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