I'm a conservative trader -- I'm only using about a third of the leverage I used to. I'm more risk-averse than I was decades ago. The leverage of each trade depends on my confidence and the risk implied by the breakout signal.
Factor Trading does not expect to turn $100,000 into $1m as quickly as possible. My goal is to maintain a double-digit return every year without major movements in my money. I reduce the size of my opening when things go wrong. On the contrary, I will increase the size of the opening. I know the old Las Vegas gambler would say I should have done the opposite -- leveraged up when I lost and leveraged down when I gained.
The factor Trading scheme uses conservative leverage. Many readers were surprised. Instead, I'm thinking of "units" of trading capital, each of which is $100,000. Leverage is how many contracts are traded per $100,000.
For example, by going long or short half a lot per unit, I mean trading one lot for every $200,000. When I trade forex, WHEN I say I short £35,000 per dollar per unit of capital, I mean £35,000 for every $100,000.
If I can make a profit of 10 to 15 percent in the next five months, I'll be really happy. On the other hand, if the trend doesn't cooperate, or I execute the plan badly, I try to keep my capital intact.
From the time I started journaling, I found that if I kept my distance from the market, I did well. On the other hand, if I want to place an intraday order based on real-time moves, I tend to overthink it.
