Prudent Risk Management Is The Only True Edge In TRADING
- Thread starter Buy1Sell2
- Start date
Agree here. Two inferior behaviors
Like when they are wrong about money management being an edge.
Here we disagree. I'm a swing to long term trader in stocks. I have no problem adding to a position as it moves in my direction. Break even stops preserve my capital.
Thanks for your posting! It's fine that you have your own opinion. Most people do not believe prudent risk management is the edge. I already knew that.Like when they are wrong about money management being an edge.
The break even stop is a psychological crutch employed by newbies and sub-par traders in order to not lose money and feel good about themselves, but is actually more effective in keeping the trader from realizing extended gains. The trader who is using the break even stop is playing to not lose instead of playing to win. The break even stop rarely has any basis in fact with regard to market activity or support and resistance levels. The market doesn't care where your break even stop is. The market doesn't know or care what your account size is and whether or not you are wildly overextended. Suggestion: Abandon the use of this worthless and ineffectual tactic and set your stop according to market levels, using correct position size for your account.
Well I've been at this for 30 some odd years and I manage to fund my lifestyle with my trading so newbie and sub-par might not fit but I use stops in order to not lose money and I do feel good about myself.
Reviewing my trades this has rarely happened.
For sure I'm playing not to lose on a trade that has gone in my favor and has reversed. Number one priority is protection of capital. Why would you assume a trader was wildly overextended?
I don't think it is either worthless or ineffectual. By taking a trade off at breakeven I can re-assess then get back in or stay out depending on what the market is doing.
The only time a breakeven stop is viable is when it is outside the noise and chart/TLNW related. In your posting, you indicate that you play not to lose on a trade that has gone in your favor and reversed. Certainly----but instead of using a breakeven stop--just get out or go the other way. I stand by my assessment of the breakeven stop utilization.
If "Prudent Risk Management Is The Only True Edge In TRADING" , does that mean that there is no other edge? Or in other words: trading is gambling and with prudent risk management you make your money?????
If trading is not gambling it means that there is an edge.
If there is no edge in trading, how will you make money with risk management if you have a lot of losses? Prudent risk management can never generate profits I think, only TRY to preserve your capital and profits. I think you need an edge in trading to generate profits.
Which means that in that case your opening statement is wrong.
If trading is not gambling it means that there is an edge.
If there is no edge in trading, how will you make money with risk management if you have a lot of losses? Prudent risk management can never generate profits I think, only TRY to preserve your capital and profits. I think you need an edge in trading to generate profits.
Which means that in that case your opening statement is wrong.