I'll dispute that! It depends on the sector or industry the stock is in. Let me use an example. The below chart is TXBM & XMM.AX, both are metals & mining sectors. Over 15 years TXBM has risen 72% and XMM 90%. XMM (Australia) has outperformed TXBM (Canada) because Aust has better climate which allows mining more continuously. Ok, lets say 80% over 15 years which equals ~5%pa. Most mining stocks pay no or very little dividends. Now sectors/indexes have rebalancing at least a couple of times each year. Also sector/indexes are weighted towards the largest cap stocks which have better chance to survive. So, 5% pa on the top stocks. What does that say about the rest? (Hint: they go nowhere or underwater)
Good discretion plus good execution skills (tactics) make a considerable edge. Risk management can be reduced simply to not over leveraging. A stop loss is a poor way to manage risk. R:R ratios are a joke.
We retails don't call it judgement, we call it bets. PRM says do not bet the farm and you will be fine.
have you read Minervini "trade like a Stock Market Wizard" ? Chapter 13 is on Risk management and fairly interesting and relates to PRM.. The first think that needs to be discussed is compounding.Its a huge part of being a successful trader,and also a large double edge sword.Simply put,if you are compounding your account,you better control your drawdowns... Simple illustration...2 out of 3 trades make 50%,one loses 50 percent...Order doesnt matter,and as you can see,the return is only 12.5% compounded as opposed to a naive 50% guestimate..That big drawdown is a crusher.. More to the point,if you can accurately predict your hit rate,there is an optimal risk to reward for your given hit rate...Again,I am talking with compounding Example..50% hit rate, 2 to 1 gain/loss ratio, the optimal profit target is 48% with a stop of 24%.That would produce an 80.04% return after 10 trades.. If your hit rate drops to 40%,y0u would lose 7.55% with that given set of parameters.Massive difference,so you can see how important being accurate regarding Winning percntage is. And FWIW, with a 40% winning percentage,the optimal 2-1 profit target vs Stop is 20% and 10% which nets you 10.2 percent compounded after 10 trades.. Theres more too it,but its a good start
You must know, otherwise why did you say stop loss is a poor way to manage risk and R:R ratios are a joke? You must know something better??? I am not arguing with you, just eager to find out if there are better ways.