Hello traders, I'm making this post in order to help the community, most of you focus to much in technical analysis but let's take back to basics a put things clear. Before continuing reading make sure to give a like this will help the community use proper risk management.
Let's talk about simple math : This is simply a conceptual series of 10 trades, taken one after the other from abeginner perspective let's us act as a beginner: if at the beginning you risk more than expected then it will take you a lot of work to recover from that DD%. Make sure to have a proper risk modelling and follow the rules to survive. New traders execute trades with certainties
" this loos good" "I will risk more" “ I can’t lose in this trade “ "I will risk more in this one because I need to recover my previous loss" . "I lost the previous one i will risk less"
Here is where the problem occurs:
When you modify parameters in your risk modeling it will have a strong impact in the outcome.
This example was clear. Our dear Mr amateur risked more in the first trade end up losing more ( uncontrolled loss) , then took another normal loss , after that he has two winning trades but guess what? Mr emotional become greedy and risk more after having two profitables trades and guess what ? He just distributed all the money back. See how his biggest loses come after the biggest wins . After that big loss mr amateur is scarred to pull the trigger and of course he cut winners very quickly because he’s afraid to distribute back . Well for him trading becomes a nightmare . Markers are consuming his pocket and soul .
Now Let us say for example that you took 10 trades with proper risk management ? With a probabilistic approach? the outcome is totally different. And guess what there is no magic trick . Profitable trading is a unemotional risk manager game , Chose wisely .
Here is where the solution is :
* EVERY TRADE IS UNIQUE , ANYTHING CAN HAPPEN.
MANAGE YOUR EXPOSURE OR YOU WILL HAVE NOTHING LEFT TO MANAGE.
PRO traders understand that in order to have results they must adopt a series per trade approach
Please do follow and comment your thoughts. let me know in the comment section what do you think about it .
good work here to demonstrate the real results ;) thx
Mihai_Iacob
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excellent!
Mcanon7
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Spoiler alert - you can't get a 7% PnL off of a 6% high PnL with an average of 4.67% and a churn of 1% - you may want to make the numbers make sense before you try to pedal that HS
AIRFOREXONE_
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@Mcanon7 yes it’s right ! I should have write a disclaimer , but I just wanted to explain the basis behind the theory
AIRFOREXONE_
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@Mcanon7 by other side I always risk the same amount of money not really a %