In the MarketVision Chronicle, I speak about focussing on the right metric.
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As a trader, you need to understand what your goal is:
a) Making more successful trades than losing ones.
b) Making money
“It’s the same thing”, you say? Not necessarily.
Let’s say Ajay Singhal made 1,000 trades. Out of this, 75% are profitable, giving him Rs. 200 per trade in profit. But 25% are loss-making, with a loss of Rs. 300 per trade.
Ajay’s overall profit is:
– 750 trades give a total of Rs. 150,000 in profit (at Rs. 200 per trade profit)
– 250 trades have a total of Rs. 75,000 in losses (at Rs. 300 per share in losses)
Ajay Singhal’s net profit is Rs. 75,000.
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