Based on my own trading for several years, and all the books and research I've read out there, it seems to me that the two biggest reasons for trading losses (and ultimately failure) are incorrect position sizing and not keeping stops properly. All the other "sexier" things like entry set-ups and market timing get the attention, but the reality is that if traders kept proper stops and sized their positions properly (i.e. proper money management), their odds of making money would be much higher. The problem is that most traders don't have the discipline to do these two basic things right.
So here is my question. Why isn't there a trading platform out there that does this for traders by default. i.e. instead of giving traders the most features and flexibility possible, TAKE AWAY features and flexibility when it comes to stops and position sizing. Make the trading platform very simple and inflexible in this one aspect. Simply give traders 3 options (low, medium, and high risk/reward) and then have the platform size their positions automatically based on an algorithm that looks at their account size and how far away their stop is for any trade, and sizes the positions appropriately with very low risk of ruin possible (even in the higher risk option). Also, make the platform not allow you to trade without a stop loss, and if you widen that stop loss during a trade the platform auto-liquidates part of the position to keep your risk constant. So this platform would take care of stops at all time by default, and also not even give you the option to deviate from a sound position sizing strategy.
Of course such a platform wouldn't be for profitable traders and pros, who would want more flexibility. But for all the newbies and struggling traders out there that continually sabotage themselves, wouldn't such a trading platform improve their odds? Just a thought...
Let me know what you guys think. I wonder if any newbies or struggling traders would even appreciate such a platform and trade through it, or would they insist of having all the "freedom" that ends up hurting them.
So here is my question. Why isn't there a trading platform out there that does this for traders by default. i.e. instead of giving traders the most features and flexibility possible, TAKE AWAY features and flexibility when it comes to stops and position sizing. Make the trading platform very simple and inflexible in this one aspect. Simply give traders 3 options (low, medium, and high risk/reward) and then have the platform size their positions automatically based on an algorithm that looks at their account size and how far away their stop is for any trade, and sizes the positions appropriately with very low risk of ruin possible (even in the higher risk option). Also, make the platform not allow you to trade without a stop loss, and if you widen that stop loss during a trade the platform auto-liquidates part of the position to keep your risk constant. So this platform would take care of stops at all time by default, and also not even give you the option to deviate from a sound position sizing strategy.
Of course such a platform wouldn't be for profitable traders and pros, who would want more flexibility. But for all the newbies and struggling traders out there that continually sabotage themselves, wouldn't such a trading platform improve their odds? Just a thought...
Let me know what you guys think. I wonder if any newbies or struggling traders would even appreciate such a platform and trade through it, or would they insist of having all the "freedom" that ends up hurting them.
