The vast majority lose money over time in this business due to: Having no EDGE. Not having the necessary understanding of the market they are trading, its participants and their various roles which are needed to find an EDGE. Poor Mindset & Discipline - unable to to design a plan and stick to it acting in a consistent manner. Undercapitalisation - causing them to rush and make poor decisions under more pressure than someone who is well capitalised. GL edit - there are more reasons but I think these are the main ones. for example being mentally retarded doesn't help, you see a lot of logic/cognitive fails on public internet forums and those people will obv donate.
Which gives you more profit. I can pump out decent profit with mediocre entries, but the drawdown relative to profit potential is very unattractive. Drawdown is your enemy. You absolutely MUST have a directional biased edge to minimize this. No other way around it. The best speculators watch their money like a sacred cow. It's easy to say "just let your profits run", but actually really hard to do while your watching your drawdown run at the same time. Not a good confidence builder. Yes, but very few can find great entries. The market plays this little dynamic game called "catch me if you can". Have you not figured this out yet? Again, keep fooling yourself This is all textbook bullshit. Great traders can handicap the noise and expansion levels before it even unfolds. Do you seriously trade? What world are you living in? Why the fuck would I want to risk 2% of my TLNW per trade? This is crazy talk
This is the only valid point in your posting. This is part of Prudent Risk Management which is the only edge in successful trading.
I certainly lose more often, but being I have manual trading, automated trading and a staff that lose too. More trades you eventually put on, more in numbers you lose, but the bottom line keeps going up, more taxes I pay, happier I am, sort of, so long as bottom line goes up. I have learned in life, you either stand still and life just hits you hard OR you find ways of keep going, whether buying each year more rental houses, yeah you become a good repairman and you have to have a Rental Plan with all the answers, you put up with a great deal of crap and you can figure out who lying to you and who is not, you take some dumb idea and make small business out of it, before you know it you adding employees, you keep moving. I started trading as a hobby long ago, I love back testing and eventually it grew. There been a few times where trading has been my only income, like in past eight years, but before I got ill, always had some job going where I worked for others even though I traded, had real estate and started businesses, I never saw at any time they were work, always something on the side that I loved to do. I suppose for most people they see being away from home as work to them even though they started those entities, I just don't cause I know I could sell it all away and not do it. Five years ago I changed my thinking, I don't do anything else other than risk management when I trade. BUT much comes before risk management to think this way. People will use term of risking 2% and have so many trades before they can blow out account, BUT, after each loss, the 2% becomes smaller of what is left in the account, that 2% is not the same on each. Newbie thinking is often on entries of systems and that is true for scalping, but not true if you going for more than 8 ticks. Entries are like 5% of Trading Plan and Risk money management is 95%-what to do before entering and after entering. Long term trading I risk like 1% and often times lower-reward I seek at first target is 6-12 times what I risk on each trade and remainder can be anywhere from 55 to 115 times the risk over the course of 2-5 plus years on the initial trade. I now do add-on trades with first targets and second half all different, plus doing option spreads. And why I am spending much more time shifting energies to long term and option trading. In day trading I risk more than what I make each and every day, like 40 trades in a day risking $150 trying to make $100-$150, Goal is 6-7 points each in ES and weekly Goal of 30-35 pts-some days I trade for full hour if day before I didn't make my Goal, 50 ticks in Crude Oil and Gold, and walk away. But some days I am risking all that to end up with 1 tick per trade, good days if make it fast and walk away in five minutes. One huge game of me against myself. We all have our own challenges in getting what we want or need in life, I think in term I have to keep moving. Be smart enough to be open minded, and be dumb enough to test everything out before risking money. I came to the market a smart guy, the markets taught me how dumb thinking that was. Life is risk, people should be good at risk, and yet few are.... Jobless Claims in morning...I love reports.
What a great post by Handle123. A lot of great traders left ET over the years but we're lucky to still have Handle123. If that sounds like I'm blowing smoke up his ass...it's because I am! Thanks for the insights buddy and hope the recovery is going well for you.
Imo's. Edges can originate from entries as well as exits. Iow, I disagree that PRM is the only thing. However, exits are more important than entries. At most any given entry, there usually is a profitable exit somewhere...the variable is when. But with exits, that's it. Game over. Profit or loss is decided. Schrodinger's Cat has been spied. In still other words, with a random entry, there is a greater chance of making a profit than with a random exits. You ultimately and finally control your risk by when your are willing to exit if the trade goes wrong...regardless of entry. Imagine a system such that, given any random entry (short or long), it simply moves, or doesn't, a stop-loss point in accordance to the movement of the underlying. The looseness of the stop-loss is determined by algos. Once the stop is hit, the system reverses position and repeats the process in reverse. This system can be said to be based solely on risk management. An algorithmic SAR. PS. Years ago, I read of a trader that could, and reportedly did (for a demonstration), successfully trade even with only random entry points.
You sir are a prize tool. A shining example of a logic fail cluster fcuk that shouldn't be allowed a keyboard. troll denied.
And that's not too surprising when you think about it. If that trader also knows where price is likely to move, he can immediately ditch the "bad" entries based on his assessment of the technical situation, whilst holding the correctly aligned positions until the predicted move plays out. Still, if you asked this trader whether random entries are his preferred means of entry...he would rightly concede that it's sub-optimal, since with knowledge of where price is heading, he could alternatively have taken the opposite position to the one taken for those bad random entries. Only if you blindfolded the trader prior to the random entry and he was not allowed to view the chart to the left of the entry price, would it be a fair test of his exit skills! Presumably, as new bars of data are received, over time he could begin to formulate a fresh interpretation of the market context, and then base his exit according to his reading of the emerging technical situation.