Despite everyone’s best efforts at formulating a great trading system, following it and controlling your emotions, the inevitable losing period can come. It is important to know the various strategies you can use to help handle the losing period. It is also helpful to know the variables you can tweak to determine which style suits …
A lot of your trading system and position sizing will depend on what your win rate is and what your reward to risk ratio is. Pretty simple statistics eh? Steve Cohen, the billionaire hedge fund manager uses simple statistics as well. In the CNBC article: How SAC Capital Works Now, Cohen says: The article then …
You hear all sorts of great traders say that risk control and money management are the pillars of trading success. After you have a trading system that has an edge this is of course very true. You hear them talking in cliches about how you should cut your losses and let profits run. They talk …
Some people wonder whether or not they should hedge. They hear all this talk about diversification, about hedging to reduce risk. It is true that if you are in a profitable trade, and you hedge, assuming it is a smart hedge, then you will reduce risk. But you also reduce the reward as well. You can …
There are many traders that are scared of trading with big stop losses. They have tried to optimize their system to death to try to get the best possible entry price, and tweak their system and settings so they can get in with the smallest possible reasonable stop loss level. Why do they want a …
Everyone takes trading losses some of the time. All of the great wealthy traders have had draw down periods. Nothing wrong with taking losses. It is a part of the trader process. George Soros took a $600 million dollar loss during the St Valentines Day Massacre. George Soros said: One of the many fears that …
You hear this repeated a lot in the trading forums and from many free articles on trading: That money management is everything in trading. That risk control is everything in trading the markets. That money management is the secret between trading success and failure. Money management is a sizable component of a successful trader. But …
There is a Wall Street Journal article entitled “Is Currency Trading Worth the Risk? Is Currency Trading Worth the Risk? I will analyze the article for you and provide my trader and order flow analysis. Account Blown Up Three Times An unfortunate trader names Michael Bolduc has wiped out his account a whopping three times. …
Should you average down in a trade or investment? A big question that many people have. They play place a trade, then it starts moving against them. They then start thinking whether they should average down for long trades, or averaging up for short trades. After all, if you average down, your average price for …
One of the most irrelevant questions I get asked is, how many pips did you make during the week or during the month? It doesn’t matter how many pips you make. It is the wrong question to ask. Let me explain why. Lets say the trader asking me the question made 500 pips during the …