Daytrading, swing, doesn't matter. The best traders often say that 10% of their trades account for 90% of their net lifetime earnings. 90% of their trades are just small probes and cash flow trades. When the odds are overwhelmingly in your favor, your exposure should be 10-50x your normal bet size with a proper tier method.
Holy grail of daytrading
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Daytrading, swing, doesn't matter. The best traders often say that 10% of their trades account for 90% of their net lifetime earnings. 90% of their trades are just small probes and cash flow trades. When the odds are overwhelmingly in your favor, your exposure should be 10-50x your normal bet size with a proper tier method.
There are market conditions that have led to positive returns within 1 week 100% of the time with sample sizes dating back to 1900 which still occur to this day. There are quite a few with a 70% positive expectancy. The issue as I pointed out in this thread is that the losses incurred in between from over trading limits one's ability to fully exploit maximum profitability either because of emotional & mental fatigue, capital opportunity costs, slipage or commission churn.
For daytrading, I don't think this applies. Other time frames it would be far more pertinent.
It's always easy in retrospect to take "top ten" stats and say what if.
But the issue is, in real time you would be trying to apply 50x your normal bet size in a situation where you are not yet sure whether it will be a home run or not. You would blow out quite quickly doing this.
I know if I tried this in the stock market, I would kill alot of my own "home runs" trying to push size on a trade where it doesn't exist.
I think, the answer to this thread is you need to make your best trades all your trades. Kind of like you need to make your second wife your first wife.
Trading is always a bet on an uncertain future, and exposure should be a function of probability. I agree though on blowing out, and going max exposure should be limited to one's understanding that 50x your smallest bet isn't more than x times margin depending on what instrument you trade and time frame. One of the most difficult things for a trader who overtrades and effectively cuts winners and losses on a daily basis is to add into a winning trade and then do nothing. This is because this trader has rewired his brain over many years into scurrying habits.
Actualy when i think about it, I agree.. Daytrading is more a market making type of endeavor and rarely a speculative event so would agree it does not apply as much. Having said that I have never met a strict discretionary daytrader who has made more than a few million in a year and that is the 1% of the 1%. And more than half of those blew out several times. Point being, profit is capped when constantly overtrading compared to what some top traders have accomplished when selectively trading with the same buying power
Livermore wrote about this in his 1940 book.
I actually squeeze out a decent profit with my intraday strategies, but the real wealth has been created by my position trades. I usually see an opportunity once or twice a quarter.
The problem is that most people can't follow the global markets for hours a day and only trade every few months.
Sometimes less is more...
I actually squeeze out a decent profit with my intraday strategies, but the real wealth has been created by my position trades. I usually see an opportunity once or twice a quarter.
The problem is that most people can't follow the global markets for hours a day and only trade every few months.
Sometimes less is more...
