flipping burgers and tossing coins are why 90% traders lose money because they are as good as technical and fundamental analysis that rely too much on accuracy/probability/infomation. There are techniques out there purely based on money management/logical algorithms and not news/charting...true winners
Theoretically yes, you may be correct. You could profit by just applying money management but you need a huge account. Probability of ruin kills small accounts in favor a larger accounts. Think of it this way: if we start flipping coins for $1 per flip, and I have just $10 but you have $1,000 you will win eventually regardless of what money management strategy I use. Ron
That's why I said flipping coin and burgers are as bad as FA/TA... Please invest your $10 in lottery and I will invest my $1000 in writing a trading book and printing 100 copies(paid by myself) to display at $50 on consignment in bookshops.
The simpliest and most reliable way I have found over the last 25 years to weed out the shucksters and thieves , is to just scroll down their webpage and look for the words "simulated or hypothetical results". They are smart enough to cover their ass once you discover the falicies of their grail.
I believe something was discussed like this a long time ago.... if i recall it went something like: if there is a 50/50 chance of a stock moving up 5 points or down 5 points, applying proper risk management creates a winning system. Stop loss at -1 point; take profit at +2 points. It got a lot of people thinking...wish I could find the thread. If this strategy could ever be successful, I think it would work best with option trading. Manage a system based on "hitting homeruns" on highly volitile stocks.
This seems to be a widely held point of confusion. The expectancy of the so-called "random walk" is hugely positive. There is nothing special about making money on a +EV wager. Fletch