A question before we start
Imagine eight winning trades and only two losing trades. Does that guarantee a profit? Pause before answering. If each winner earns one unit, the gains total eight. If each loser loses six units, losses total twelve. The result is a four-unit loss. Today begins with this distinction: counting wins is not the same as measuring outcomes. Every numerical example in this lesson is hypothetical.
Think like a shop owner
A shop can make many sales and still lose money after rent and the cost of goods. Trading is not simply collecting green numbers either. Gains, losses and costs belong in the same calculation. Market photographs in this lesson are illustrative, not BamaUp results or instructions to trade. Our goal is a decision process that can be explained before the cost is incurred.
Five sentences before entry
Write five sentences before entry. What is the market context? What exactly defines the setup? Which observable event permits entry? What invalidates the idea? What is the planned loss? Saying I think it will go up does not answer these questions. Driving requires more than a destination; you also need brakes and an exit route. No real-money trade is needed for this exercise.
Example two: include the costs
Now consider five winners of two units and five losers of one unit. Gains total ten, losses total five and the gross result is five units. If each trade costs zero point two units, and those costs were not already included, ten trades cost two units. The final result is three units, or zero point three per trade. This describes this sample only; it does not guarantee the next outcome.
A planned stop is not a promise
A stop clarifies where the plan is invalidated, but actual execution can differ from the requested price. Price distance, contract specifications and order size must be considered together. One unit in our example does not automatically mean one dollar or one percent of an account. Use a demo account for practice and do not suddenly change sizing rules just to recover a loss.
Exercise and answer
Pause and write the five sentences for two imaginary situations. Give the first a clear trigger. In the second, deliberately leave invalidation blank. Which is better specified? The first; the second is not a complete plan yet. Success here means a complete decision, not a profitable prediction. The lesson text and worksheet are on the site. Next we unpack the four prices inside a candle.
