Prudent Risk Management Is The Only True Edge In TRADING

[Mr Subliminal]

"Cut your losses short and let your winners run. Excellent advice, but you're talking generalities. When you get to the specifics of how to do this, it becomes a lot more complicated and without some type of edge all you are going to do is delay taking your trading account to zero."

@deaddog, Jan 27, 2016

"Have you tried it?
Most traders wont cut losses or let winners run.
They hope the losers will come back and take small profits as soon as the price starts to move against them."

@deaddog, Aug 26, 2023

 

[deaddog]

What made you change your mind? The thread is too long for me to find the answer myself.

I don't think I changed my mind. Just curious as to what criteria you were programing in.

 

[Mr Subliminal]

I don't think I changed my mind. Just curious as to what criteria you were programing in.

To quote @Buy1Sell2 from way back in this thread, it's proprietary

 

[deaddog]

To quote @Buy1Sell2 from way back in this thread, it's proprietary

Wow!! You're going to program a proprietory bot that you believe doesn't work.

 

[Mr Subliminal]

Wow!! You're going to program a proprietory bot that you believe doesn't work.

I'm programming that bot like I'm dashing to the nearest casino. Humor, my friend. Or was that your attempt at humor?

 

[deaddog]

I'm programming that bot like I'm dashing to the nearest casino. Humor, my friend. Or was that your attempt at humor?

LOL!! My bad; thought you were serious.
And I thought I had a pretty good sense of humor.
Now I see it.

 

[ironchef]

You are confusing money management and edge.MM is not edge and there is no "universal thruth"..

If you want to make a point,back it up with numbers,i.e simple stats

Perhaps it is true if you always BUY1 then SELL2...

 

[Jzwu2017]

I think in the current (and probably future) market with AI/algo trading, cutting your loss short is still valid as always. However, letting your winner run is rather questionable, perhaps more like taking your profit quick.

Therefore, risk management is not the true edge. At best you’re just making small profits.

 

[virtusa]

The edge is the answer, not the risk management. If you have no edge, risk management can never make money for you.

One of the things I learned while being many years on ET is that if the discussion goes in round circles and never reaches an ending point it is better to stop that discussion.
This thread has 60 pages of discussions that make no sense for various reasons.

What is part of the risk management, and what is part of the tradeplan? I have no risk management at all, and never needed one.

What was there first? The chicken or the egg?

One possible thing that makes sense is compare three traders who have a different opinions:

• one thinks risk management is the only edge
• one that thinks risk management is NOT the only edge
• one that thinks risk management is NOT an edge at all

The one with the best results has the correct answer.

But then we can post again 80 pages to discuss if one of them was just lucky, or that the lenght of the test was not long enough, or maybe even too long, etc,etc...

I don't understand why people can repeat in 20 posts that they are right and the others are wrong without getting any 100% correct proof. It is like trying to find the start and ending point of a lemniscate. Never ending.

 

[ironchef]

Perhaps it is true if you always BUY1 then SELL2...

In all seriousness @taowave, you are a professional options type, likely have never done professional day trading.

For some day trading approaches, I think "risk management" is their edge. 30% of ET voted for it, they cannot be all fools.

@Buy1Sell2 like you have been around for years, from his name & longevity, likely a good day trader and I do take him seriously.