Trading is not a get-rich-quick scheme If you are looking for something that will make you rich quickly, then you should NOT even think about trading. To become a consistently successful trader you need to master fundamental analysis, technical analysis, and money management. It usually takes years. Also, you need to learn how to handle the psychological aspects of getting your ass kicked... regularly. Paul Tudor Jones, one of the most successful traders, put it simply: Notice that the potential reward is 2 times bigger than the maximum potential risk. Often, market strategists find the ideal risk/reward ratio for their investments to be 1:3. A risk/reward ratio of 1:3 means that an investor is ready to risk with $1, for the prospect of earning $3 on his investment. example Fig . 1 or 2 Seasoned traders mostly set their targets and emergency stops before they enter a trade. As our old friend Paul Tudor Jones (trader & hedge fund manager worth ~$7 billion) said: "The most important rule in trading is: Play great defense, not great offense." Some traders win on less than half their trades, but because they make much more money on their winners, they end up ahead. “You have to be able to handle getting your butt kicked. No matter how you cut it, there are enormous emotional ups and downs involved." Here's the good news You don't need to be right 100% of the time when trading. Do the best traders win 80% of their trades? Not even close. Even a professional trading strategy may in fact suffer a 5-trade losing streak, or worse, at some point. The difference between successful and unsuccessful traders is that successful ones win at least a little bit more on their winning trades than they lose on their losing trades. Trading success does NOT depend on just being right more than 50% of the time. Success depends on controlling and cutting the losses quickly AND letting the profitable trades run their course. If you follow smart money management rules you can set up your target profits and stop-loss orders on every trade so that your potential profit is higher than the risk. Here's an illustrative example of how experienced traders often set up their trades and risk management