Can we do better ?

OK, I know that traders don’t like losing, so could we have done better ?

Well using the standard trade guidelines, all these three setups were valid. BUT I want to take a closer look at the first TS4 setup. As this is not really advanced analysis as it is covered in the trading course (and I know that you have all read and carefully studied the Trading Course !!) I will include it in this Blog. You will already know that the DP from the minor Wave b high or low is very often the place a setup will fail (if it is going to fail). As you can see, this nailed the high from the TS4 buy perfectly............. So how can you use this information ?

Well, at the very least, once a trade gets to this level you should start to think about raising your protecting stop. In this example if not to break-even, then at least to just below the last minor swing low.

This would have had the effect of reducing the loss here even further, so “ideally” this would have been 1 break-even, then 1 loss and then 1 Profit. So only 33% losing trades - a much better figure to live with

Thanks, Steve

Does 1 out of 3 winners mean losing money ?

Hi Everybody,

Yesterday was a brilliant example of how correct Position Sizing can help you so much. On the 3min ES we had 3 trades, and only 1 made money. 33% success rate would “on the surface” seem rubbish. BUT, and this is what most amateur traders miss, by using correct position sizing, the loss on the 2 losing trades was kept small, at just -1R each, and then (this is the really import bit) the profit was +3.9R (ignoring slippage and commission, i.e. much much larger than the losses.

So just on the surface, 1 profit and 2 losses actually made +1.9R (+3.9 -1 -1) profit !!

Most amateur traders simply cannot understand that it is not the number of winners or losers it is their SIZE that matters.... that is why on average 95% of amateur traders never control their risk and as such go bankrupt.

Thanks, Steve