If you go and ask any successful trader or investor what's the most important thing in trading, he/she will tell you that it's capital preservation. In fact, the hardest part in the markets is not making money, it's being able to keep it, and over the long term increase it.
How many times have you made profits just to give them back to the market the next day, week or month? That can be very frustrating and lead to even more mistakes that eventually end in blowouts.
Now, there's no secret formula that will give you the ability to keep the money you make and never give it back because losses are a natural part of trading. There are some advices that can help though.
One of the most important thing is to select only the trades where you have a very high conviction. Those trades where you can see almost everything stacked in your favour. When you find those opportunities, you won't feel any fear of pulling the trigger or even risking more money. You won't even feel the pressure of taking the trade off if the price starts to pull back.
How many times you had a trade going and at the first pullback you took the trade off leaving money on the table? That happens a lot, and even if it's natural, most of the time it's caused by inexperience and emotion-led mistakes.
That's why conviction is important. The best traders/investors in the world don't risk the same amount of money on any given trade. They size their trades based on their conviction in a particular idea.
Can you find those trades with technical analysis only? The answer is no. Technical analysis is just a risk management tool. It just shows you what happened in the past, not what might happen in the future. And the markets move based on future expectations.
You should know what moves the asset you are trading, the economic cycle you are in, the risk sentiment regime and so on. But when you really see the ball, go for it.
Will you find those opportunities often? Hell no, and that's why you should maximise your returns when you find them. You might be thinking "that looks boring". Yes, it is. Good trading is not fun. There is a trick though to maintain the discipline to wait for good trading opportunities while also increase the number of them: trading different asset classes.
This way not only you will find more opportunities, but you will also have a broad fundamental picture which might give you even more conviction in some ideas.
Lastly, keep learning, keep reading, keep increasing your experience. Don't fear mistakes or failures, because they will be the best lessons. People study for years to become lawyers, doctors and so on. Trading is no different. You are joining an arena full of smart and experience poeple, so be prepared for it.
