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2. There has never been and never will be a Super Bowl champion that ranked in the bottom 20% of league defensive statistics. |
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Teams with porous defenses that give up lots of points never become champions. Offensive units can never score enough points to overcome the deficit created by a defense which continually gives up too many points. The most successful teams in all sports always field a defense which ranks in the top 20% of league defensive statistics. Many times, they are the best defensive unit in the entire league. Likewise, in speculation you must focus on defense, not offense. If you are not focused on defense, you will never become a truly successful speculator. The primary goal in speculation is not to make money. The primary goal is capital preservation. Capital preservation is skillful psychological and financial management of losing trades. Capital preservation is defense. |
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Neal: So it is capital, profits, and risk, right? |
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Phantom: The primary focus is the percentage of capital and the percentage of profits you will lose if your trade proves to be unprofitable. Will you be risking more than 2 to 3% of trading capital on the next trade, and if so, why? If your profit center currently has $10,000 in net income and your contemplated trade will lose $9000 if it proves to be unprofitable, how will this affect you psychologically, especially if it took 20 trades and two months to earn the $10,000 profit? You must play defense. Never lose more than 2 or 3% of trading capital on any trade unless you are in a high-risk/high-reward situation. Unprofitable trades are points given up to the other team. Profitable trades are points scored. If you have a poor defense and surrender too many points, your offense will never be able to score enough points to overcome the deficit. A great offense will never negate a poor defense. This type of team will always fail. Once a team gets behind because it continually gives up points, the offense slowly but surely starts to panic and discards its game plan. Now they |
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