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
So what happens when his 80% win rate edge seizes to exist and no other edge can be established? Tomo is correct in stating that lack of knowledge + MM = death by a thousand cuts. But knowledge + MM = overall positive expectancy. Have you read the whole article?
 
romik said:
So what happens when his 80% win rate edge seizes to exist and no other edge can be established? Tomo is correct in stating that lack of knowledge + MM = death by a thousand cuts. But knowledge + MM = overall positive expectancy. Have you read the whole article?
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I've had my edges die on me before. I go back to trading 1 lots and scale right back and regroup. I'm not saying MM isn't required. I just am saying it's common sense (at least to me).

But it isn't an edge.

I've seen guys make fortunes that take insane risks. Risking 10k to make 1k. But they're still going strong 10-20 years later and have enough money to never need to work again. All I'm saying is textbook learning is very different to reality. Money management is no edge.


It's like saying the difference between a great racing driver and a mediocre one is his crash helmet. Yeah without a crash helmet you probably won't be around for long. But it's not going to decide whether you win races or not.
 
tommo said:
Money management and psychology is what "gurus" bang on about to sell course because it is easy to define and give you a little video to watch or book to read about how if you only risk 2% you will never go bust and if you do its your own "psychology".. sign up to the next course to learn about psychology. Total B.S

I dont mean to come across arrogant because I am not, i am only too aware of how uncertain this industry is and how you have to always be vigilant. But makes me so frustrated when i see new traders/frustrated traders marching off down the "oh if i only had a risk:reward ratio of this, and only risk x% a trade I would be ok". No you wont. If you dont have an egde money management just means you lose money slower.
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You just come across as a person who has found something that works for you. Lets toast!
But Gurus sell money management and psychology because its easy money and most people have problems with both or just one. If you don't have an edge, money management keeps you in the game until you find your edge. On an further note money management also give you more time to deal with your psychology issues. You've said it yourself money management means you just lose money slower and that deserves another Toast!


Losing defines your weakness and as for winning? It only postpones the inevitable; the magnitude of the inevitable depends on how long you’ve been losing.
(Its money management, psychology and Knowledge)
 
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Tomo, folks that achieve 80% win rate are in the minority. For the rest of folks that will never achieve that consistency only proper money management and of course knowledge of price action or whatever else they choose to look at will prevent from going completely broke (subject to etc.).
 
"...That is the reason that most traders end up losers. They don’t allow for the possibility of a major string of losing trades." - extract from that article, spot on. Has, does and will happen to the vast majority in trading.
 
romik said:
"...That is the reason that most traders end up losers. They don’t allow for the possibility of a major string of losing trades." - extract from that article, spot on. Has, does and will happen to the vast majority in trading.
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EXACTLY RIGHT
 
tommo said:
It's like saying the difference between a great racing driver and a mediocre one is his crash helmet. Yeah without a crash helmet you probably won't be around for long. But it's not going to decide whether you win races or not.
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Just as with Prudent Risk Management in trading, you do not have a full grasp of what is meant by Prudent Risk Management in racing.. A crash helmet is a very small portion of risk management. A stop is a very small portion of risk management.
 
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