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
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
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