Prudent Risk Management Is The Only True Edge In TRADING

Is Prudent Risk Management the only true edge in trading?

  • Yes

    Votes: 53 29.9%

  • No

    Votes: 124 70.1%
  • Total voters
    177
Buy1Sell2 said:
Edge does not mean edge over myself.
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True edge is all about mastering self, and not in the way the looney tunes write about it.

RSI, MA, FIBS, etc, etc, are all secondary.

Stop and think about it!

How can all the different TA work for different people!

There is one common thing.

Guess what it might be?
 
MrScalper said:
True edge is all about mastering self, and not in the way the looney tunes write about it.

RSI, MA, FIBS, etc, etc, are all secondary.

Stop and think about it!

How can all the different TA work for different people!

There is one common thing.

Guess what it might be?
More...
Successful trading is about one thing and one thing only----Prudent Risk Management.
 
Buy1Sell2 said:
Successful trading is about one thing and one thing only----Prudent Risk Management.
More...
Then why do traders that are already PROFITABLE with ONLY PRUDENT RISK MANAGEMENT, continue to seek a higher win rate away from just RM? All the traders on ET that agree with you that "risk management" is the only "true edge" are probably looking (stealthily) for a higher win rate in their entries in their back testing. Why is this? Because if they accomplish a higher win rate with their already established/profitable risk managed method...profitability would increase substantially! How could they deny such a golden carrot? You can't tell me that no trader in the history of mankind hasn't found a better entry for their risk managed based method. If they follow your wisdom strictly...their just denying POTENTIAL PROFITS!
 
Let's look at an extreme example of why chasing win-rate is the wrong way to approach trading. --A trader develops a system that will take profits at a 90 percent win rate and will obtain 2 ticks profit. This trader sets their stop level at 25 ticks.
 
Thus---this trader has no edge. However if the stop level were only slightly lowered, the trader would be a winning trader. Prudent Risk Management is the only true edge in trading.
 
Buy1Sell2 said:
Successful trading is about one thing and one thing only----Prudent Risk Management.
More...
Sorry to ask again. Can you run it by me one more time: What exactly is Prudent Risk Management. I never understood what it was and how to execute.

Thanks again.
 
ironchef said:
Sorry to ask again. Can you run it by me one more time: What exactly is Prudent Risk Management. I never understood what it was and how to execute.

Thanks again.
More...
In order to be successful in trading, it doesn't matter whether you are right or wrong when placing a trade. What does matter is that when you are wrong, you lose a little bit and when you are right, you maximize your gains. Why do most traders (especially day traders) lose? They don't have prudent risk management skills. End of Story. Now, a lot of folks may say, "but the newbie trader doesn't know how to pick entries and exits". While that may be true for some, the real issue is that when they are wrong, they stay married to a position, or add to a position in order to not admit failure. Your best bet would be to learn to embrace failure, learn to shrug it off, learn to admit when wrong and learn to stay in trades that are winners. You see, Prudent Risk Management is not just about placing an initial stop---it's also about managing a winning trade. Remove the focus from high winning percentage. Retrain focus on losing a little and making a lot.
 
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