Hello deaddog, Congratulations to your sir. Awesome. It is worth the try. Glad to see you been doing it for 20 years.
Well, that's the Holy Grail....generally knowing the future. You can't let your winners run, and losers cut short, if you haven't established a reasonably accurate hypothesis of the future. So many traders, and automated traders, are trying to just set their parameters blindly at 2:1....and let the machine do its thing. If only trading like that were so easy, instant and an automatic road to riches. But the real world is slightly more complicated than a basic formula, Picasso and Einstein. A trader doing that...is similar to a mouse or insect trying to gain control and escape from a flushed toilet. They are helpless to the variables and conditions and storms they are in in the market. At best, by the end of the year....they are break even, or slightly, marginally, only profitable. I would hardly call that an E, T 20,22
That are a lot of reactions... do not know where to begin here. Also it is off topic In my opinion, I think 'would be' traders do not understand good trading has nothing to do with predictions, or being right. It is all probability, money management and how you think, feel, belief in what you are doing. Yes, a human can withstand a 70% losing rate. But he can only do this if he really, really understand how it works and that the outcome will be in his favor. To get to that point, you need to know the inside out of your trading system and have a rock discipline in his mind. It is that what can take a very long time...
It is not a belief fallacy. All what you are talking about is about how you create your exit rules. I can give plenty examples of how you can create different exit rules. A few: trailing stop from the beginning, trailing after a target is reached, trailing tighter after X r return. Starting with a very tight stop and losing your stop after X move in your favor so you can get the bigger move, but still have the tighten stop, so your R is very small, scaling out a portion at different targets, and so on. And you can make also combinations, in short you imagination is the limit.
To last 30 years you cant get bogged down on individual trades. Losing 60% of the time can be depressing, so you have to look at the bigger picture. Let's say you have a system that only wins 40% of the time with 2:1 RR on individual trades. The same system on the monthly time scale, the monthly win rate can be well above 50%. Depends how many signals you get. The more of those 40% win rate 2:1 RR trades you can get each month the better. Say you get 10 signals every month, your monthly win rate might be around 60%. If you can get 100 signals then your monthly win rate might be over 90%. If you can get 300 signals a month you might never have a losing month. That makes the 60% losing trades a little easier to handle. Knowing your monthly win rate will be well above 50%, just as long as you execute properly.
You just made the definition of what trading is.. buying low, selling high or a variation can be: buy high and sell higher. Never said it is easy, but it is that simple. The same as you cut your losers to protect your capital and you let your profits run to grow your capital. It is not rocked science.
Many, I include myself in that group, start with a loose stop and tighten based on PA and trading plan particulars. We also like to sell high, buy low. Both ways (long and short) work ya know.