You must pick the loss side first. Why? Otherwise, after you enter the market everything you look at and hear will be skewed in favor of your position. For example, if someone has a long position and you ask him what he thinks about the market, is he going to tell you all the reasons why it should go down? Of course not. He’s going to tell you all the reasons why it should go up. Another reason controls should precede strategy is that, as we learned in chapter 7, you can’t calculate the probability of a trade’s being profitable; you can only calculate your exposure. So all you can do is manage
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