Hi Everybody,
For the Standard Traders among you, yesterday on the 3min YM was a brilliant example of why using Correct Position Sizing is so important. Here we had 4 automatic trades, of which 3 were loses. Yes, 3 losses and only 1 Profit. On the face of it, this looks horrible, but that is where most amateur traders makes their biggest mistake. They do not realize that using correct Position Sizing means that their losses are kept small and their Profits are large. So in this example we had 3 x -1R BUT (and this is the important point) the 1 Profit was +4R, meaning that money was made overall (+4R -3R = +1R Profit overall).
This is the point that so many amateur traders never seen to understand, it is not the number (or %) of winners to losses that is important, it is their size !
Thanks, Steve
PS, But take a look at the Advanced Blog, that is where yesterday became a brilliant day !
For the Standard Traders among you, yesterday on the 3min YM was a brilliant example of why using Correct Position Sizing is so important. Here we had 4 automatic trades, of which 3 were loses. Yes, 3 losses and only 1 Profit. On the face of it, this looks horrible, but that is where most amateur traders makes their biggest mistake. They do not realize that using correct Position Sizing means that their losses are kept small and their Profits are large. So in this example we had 3 x -1R BUT (and this is the important point) the 1 Profit was +4R, meaning that money was made overall (+4R -3R = +1R Profit overall).
This is the point that so many amateur traders never seen to understand, it is not the number (or %) of winners to losses that is important, it is their size !
Thanks, Steve
PS, But take a look at the Advanced Blog, that is where yesterday became a brilliant day !
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