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Use my M&M principles to maximise your profits this year!

by , 11 February 2013

Did you know that 97% of amateur traders lose money on the stock market?

And only 3% get to enjoy any gains?

To tell you the truth, I used to be part of that 97% during my first few years of trading... Until I developed my M&M principles that is!

My M&M principles have resulted in a turnaround in my trading fortunes.

So what are these secret principles I have learned over the years?

These M&M principles have helped me to make consistent trading profits in the medium to long-term.

And now you too can use this proven approach to trading and investing to join the 3% of market winners today.

Read on to learn how to put my M&M principles to work for you…
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It all comes down to 2 key points: Method and Money Management.

There are as many trading strategies as there are traders out there, but over my years in the markets, I’ve noticed that there are two clear principles that all successful trading strategies have…

The first 'M' in my M&M strategy is what I call the Method principle.

The Method is basically a set of criteria and strict rules that form the backbone of your trading plan.

Your Method key to your success.

Just think: The reason 97% of people lose money on the markets is because 97% of people enter into the market without any form of trading Method or plan.

This is like building a house without the use of blueprints.

Your house will start off unstable and will inevitably collapse. Similarly, trading without a plan or Method will lead to a collapse of your bank-account. The point here is, no matter what trading strategy you use, you need to have a set plan that you follow.

What plan you follow depends on your risk-appetite and your trading personality. So there’s no one strategy that’s perfect for everyone. But there are some basics that your strategy should have…

But when you enter into the market, you want make sure to enter with clear Method, including:

1)    Your reasons for entering the trade
2)    At what level you will take profit
3)    A defined stop-loss level

By having a clear Method for trading that gives you these three points, you’ll already be better positioned to make profitable trades.

The Second M in my M&M principles is just as important…


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Money Management is the key to surviving and thriving in the markets!

Money Management is simply that: Managing your money in terms of your profit and loss while you’re in a trade.

And this principle is critical to limit your losses and maximise your gains.

And to Manage your Money comes down to managing your risk. 

To do this, I implemented a risk/reward strategy into my own trading.

Knowing how much you can lose and how much you can gain in your investment is the key to deciding whether you should enter a trade at all.

So, for each and every trade I get into, I weigh up the profit ad loss potential before I commit my money.

I work on a risk to reward ratio where the profit potential of the planed trade is at least twice the size of the potential loss on the trade.

So, for example, if I see an opportunity to purchase XYZ share for an 80% gain, I then need to be sure the downside of the trade is less than 40%. If the downside risk is any larger than this, the trade is too risky to get into.

If the potential downside is less than 40%, however, the trade will meet my 'greater than 2:1' risk requirements. (Potential gain of 80% / Potential loss of 40%.)

Another key to sensible Money Management is setting - and adhearing to - a stop loss on all your trades that reflects your risk/reward tolerance.

A Money Management strategy, incorporating a sensible risk/reward ratio and a strict stop loss, will help you to set aside your unreliable emotions and ensure your winners always outweigh your losers.


So should you expect to win after the first trade with the M&M principles in place?

No!

Trading is about consistency and persistence with a strategy long enough to make you profitable over the longer-term.

Not all your trades will be winners, but with the M&M strategy in place, you’ll make sure your winners outweigh your losers. And that means, at the end of the day, you’ll be left sitting on profits.

So make sure your strategy has the M&M principles today and start becoming a more profitable trader.


Always keep in mind, “Wisdom Yields Wealth”



Use my M&M principles to maximise your profits this year!
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