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Two Corollaries

  
  Education
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Corollary 1

If most of the money that is lost in the markets is lost by traders who thought they knew which way the market was supposed to go, then most of the opportunity that is missed in the markets is missed by those who couldn’t possibly believe the market would go that expected distance — but in the opposite direction.

Corollary 2

If most of the money that is lost in the markets is lost by traders who thought they knew which way the market was supposed to go, then most of the money to be made in the markets is made at the places where most traders are proven wrong and stopped out.

Know Your Risk Tolerance

  
  Education

Every trader is different, and only you know your risk tolerance. Are you the type of trader who can risk 20% to make 20%, or do you feel the need to have a much higher risk/reward payout in order to enter a trade? Be sure to define your risk before placing any trade orders. Doing so helps ensure that you have an exit strategy, which is arguably just as important as your entrance strategy. A little extra work in the beginning can make all the difference in the end.

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