Defining risks in terms of number is crucial. If you can’t think in terms of numbers, don’t play the game.
To be successful as a trader; and to be successful in life, you need to develop the ability to ask the right questions.
Trend Following strategies make their money on the edges of the bell curve.
Act as a devil’s advocate. Question assumptions. Check your inferences. Consider the improbable or the unpopular.
People mistakenly see a “regular” event and think it “rare.” They think chance will “correct” a series of “rare” events. They see a “rare” event and think it “regular.”
People tend to regard extremely probable events as certain and extremely improbable events as impossible.