Traders are advised to follow a set of practical rules to avoid common pitfalls in the market. Firstly, avoid high-price entries, especially above 0.55, and be particularly cautious with prices over 0.65 unless you possess a strong informational edge. Secondly, cap single-event risk by limiting exposure to 3-5% of total capital per event, ensuring no single outcome can significantly impact your account.
Additionally, focus on trading price movements rather than just resolutions. This involves taking partial profits and cutting losses when probabilities collapse, rather than waiting for a binary outcome. It's also crucial to track your win rate against the break-even rate; if your win rate falls below the break-even point, it's time to stop and reassess, as increasing volume won't fix a negative expectancy. Lastly, eliminate consistently underperforming markets from your portfolio, as persistent underperformance indicates a lack of edge.
Practical Trading Rules to Avoid Common Mistakes
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