Here is the thing with proper money management. In the hands of an amateur trader, this will save his ass so much that it seems like a holy grail. In the hands of a pro, its not really thought of as an edge because its second nature, absolutely essential, and had already been learned long ago. Part of proper money management, which I would prefer to say is more so proper trade management, is also taking profits. You don't really need a trend. What you need is a plan, no matter how shitty, and always sticking to it. If all you ever did was emotionally react to price thrusting through a level, and always did the same thing of buying, hoping for 2 points above the break, or selling this thrust and hence fading, but also making sure to always stick to a firm stop, be it 2 points or 3 points or whatever, you would see that its the consistency that will save the day. I'm not saying you will make money, but if you keep it to a 1:1 ratio, so either -2 or +2 points, there is no way you will lose 80% of your trades after 10 or 20 trades. If you do, then clearly you just need to take the opposite trade and you have an edge! So many stats that I collected were mostly within the 40-60% working range. But this of course is dependent on being firm with sticking to your targets. For new traders, taking profits is much different than taking losses, and its always much easier to lose in the end somehow. If you let your profits run lets say, which isn't a bad rule, but this means that often maybe your 2 points profit that you had is gone, and you're left wondering if you should get out at BE so you don't take a loss. But if you had just kept to a target, you might have already been out and gotten that profit. New traders managing a trade will rarely do better than sticking to a firm stop and target, no matter how much better than think they can do by actually managing the trade. So many of my trades would stop 1 tick from hitting the stop, and then turn around and go straight to the target. If I manage it, I might get out at BE, happy to not hit the stop, but this now means that I didn't get my profit. Its the same thing with time stops. Sure, sometimes you save yourself from taking a loss if you get out in a few minutes if the trade isn't working, but when you look at a nice series of trades, you might see that some of the time you save money by it not hitting a stop, but you also miss those times when it would eventually hit the profit. There was a discussion here a while back about time stops, and although a few people here thought they helped, there were just as many who said that their stats didn't show an edge by getting out for the above reason. Anyway, so my point is that consistent trade management is hugely important, perhaps the most important, short of having a crystal ball and knowing which way the market is for sure going.
Quit with the ABSOLUTES! Serious question though (for Buy1Sell2, Handle123, or anyone else): In your opinion, do think averaging down in general is prudent risk management (like handle123)? If YES, is the averaging down the edge or is the "area" or "zone" that one chooses to average down "in", the truer edge? If the answer is NO, do you believe the "area" or "zone" you go "all in" (like Buy1Sell2) has any edge to it? Or is it just math...1:3 RRR for example? I think the "zone" or "area" that one chooses to initiate their prudent money management setup in is still choosing probability of price direction, therefore...the better one chooses these "areas", the more successful the setup becomes...right? So, logically it would make sense that even "money management" traders have a lot of room for more "edge" by determining price direction better. That's why some money management traders are more successful than others...some pick price direction better than others. So once again, it sounds like an edge at determining price direction is still an edge that exits! So, why do so many strict money management traders (like Buy1Sell2) claim price direction or anything else for that matter, have no basis for an edge? Obviously, they use it to some degree whether they know it or not!
Many ways to go about it. Do you trade large and scale-out short-term, or trade small and scale-in long-term? Do you trend-trade, or exit on targets? Large entries require high liquidity, so only suitable for such instruments. Trend-trades rarely can beat the 50% winratio, if ever possible, while targets limit your profit potential and increases costs. To stay in trend, are you prepared for a 50% haircut, if not, do you know what that may mean to your pnl? In my experience, you find what you look for. Look for weakness, that is what you'll get. Why should support hold and not break? In my view good markets are always trending. Though that is just one perspective in the markets. Look for strength, if you can't hold onto it for dear life, you'll lose it again and again. What do you need in order to justify "breaking" your rules?
Read Carefully the above: You may still lose money in short term using PRM! And you may Not even make much money in long term using PRM, as a winning strategy!
You're confusing "money management" with "trade management"...two completely different topics but work great together as part of any trade strategy. I think most traders have some kind'uv "trade management" theme but "money management" is tough for many for some odd reason. Also, if you use ET search...someone once made a nice distinction between the big management themes...money management, trade management and position size management that included explaining how they are related. I can't remember who made the post but I think it was NoDoji...someone that's been accused of never talking about money management.