The importance of correct Position Sizing.

Hi Everybody,

Here is a great example of why correct Position Sizing is so important, to keep your losses small and your Profits large.

Here the FTSE 3min had two losing trades, but (this is the important part) the 3rd trade (TS3 sell) made approx +3R (ignoring slippage and commission). So -2R plus +3R = +1R Profit overall. Or in other words, 2 losing trades and 1 winner actually made money overall................

This is the point that so many amateurs traders simply do not get. They all strive a high % if winners (which is actually very very very hard to do for a long time). BUT they do not understand that you don’t have to have a high % of winners to make money, the most important point is that the losses must be kept small, so a number of losses are then cleared and put back into profit again by one big winner.

Here this +3R profit (which was not that big) cleared two prior -1R losses and made money overall............

Most Amateur do not get this, that is why 97% of amateurs fail in this industry............... Bottom line, you must keep your losses small and profits large – it is all about Risk Control........... To become a successful professional trader.

Thanks, Steve

FOREX – GBPUSD 60min (Part 2)

As you can see from the chart the automatic DP buy (shown in the last post) was indeed off a Wave 5 low. This is where the Elliott Wave module in the full MTP v6.0 helps......

Advanced traders could have used the higher DP to protect slightly more profit than the ATRStop.

In this example I am using eSignal data saved to the hard drive via QCollector then loaded into the current MTPredictor V6.0.

Thanks

Steve

FOREX – GBPUSD 60min

Hi Everybody,

A nice DP long trade on the GBPUSD 60min chart has just been stopped out. As you can see from the chart, using the standard trade management guidelines this would have resulted in a nice +5R Profit approximately.

As you all know, I only like DP’s when they come at larger degree support / resistance or at the end of a nice 5-wave sequence, so let’s see this in the next post.

Notice how the automatic Position Sizing guided you how many lots to take for a constant initial risk. Correct Position Sizing is vital for long term trading success....

Thanks

Steve