Many novice traders are searching for that Holy Grail of trading success, which for them is finding the perfect indicator to achieve the perfect entry. Let me state emphatically that there is no such thing as the perfect indicator. Why do people believe that there is?

It has been suggested that traders believe that being involved in the entry of a trade somehow implies they have control of the market. It is true that when you enter a trading position, you do have absolute control of the entry, but that is where your control ends. You have no control over how the market will behave, since the market will simply do as it wishes.

It is not when you buy the stock that controls how much money you make, but when you exit and how much money you put into the trade in the first place that determines how much money you will make. This is the core principle of excellent money management.

With any trading system, there will be wins and there will be some losses. Many successful trading have success rates only of 30% to 50% and they are still highly successful overall. This is because their profitable trades far exceed their losses. Let me explain how this can happen.

Your trading system may provide a profitable trade one-third of the time. It is quite feasible that every profitable trade may be four times more profitable than the equivalent loss in the losing trade. A winning trade may generate, for example, a profit of $400 and the equivalent losing trade a loss of $100. Even though the system wins on average only a third of the time, the overall result is a profitable one.

The reason is that each winning trade more than compensates for the losing trades. That is part of the trading success. In this particular example, over three trades, there would be a profit made of $200.

Therefore, trading is not all about Trading success  the perfect indicator to get the entry just right. You need to think about other things, such as proper money management.

Money management is managing your risk. It is a set of rules and guidelines you set up to minimize your risk. Remember that each trade is individual and whether you win or lose has nothing to do with what has come before.

It is important to acknowledge that with any trading system that you create, a certain number of trades will go against you. There is no such thing as a system that is one hundred percent successful, just as there is no perfect indicator which will provide you with the perfect entry every time.

In summary, no system gets it one hundred percent right and each trade is independent of the previous trade. Excellent money management rules ensure that your positions are small enough that you don't blow your capital, yet are large enough to maximize your profit. Get these rules to maximize your risk in place and enjoy the rewards of a properly functioning trading system to achieve your trading success.