Prudent Risk Management is not just about controlling losses.
Tell me why I can't grow my account to $1M in 12 years
- Thread starter jeffbader
- Start date
you can get a bit fancy but at the end of the day it's still about losses... what risks are there in trading, other than losing money lol.
an edge is a coin flip that turns up 6 heads 4 tails... that has nothing to do with 'risk management', per se.... but we are going a bit off topic lol.
Please read my opening posting in that thread.
I did... wanted to reply there, but already there are correct responses like post #3 in that thread.
but I will reply here and make a point relevant to this thread.
'risk management' is NOT an edge. if you enter long or short at random, and set profit target to be $10 and stop loss to be $1, you will never make money... or $8/$2, or $7/$5.. doesn't matter.. basic statistics.
but, on the other hand you can back test with a period of bull run, and no matter how you set the target/stop, you would always make money if you keep enter trades on the long side.
so are you a profitable trader? then you have just confused genius with bull market lol. i.e. you have made money, by being on the correct side of the market, either by skill or by luck, but had nothing to do with 'risk management'...... i.e. if you ate eggs for breakfast during your winning period, it would be equally absurd to say the 'true edge is eating the eggs'.
and going forward how do you keep making trades on the 'correct side'... the true edge is the skill to read the market.
so now back to this thread - a newbie doesn't know what he doesn't know... and the biggest 'unknown' is how much misinformation there is in this space.
like if you want to do real estate, you can actually read a bunch of books, take a course from a 'guru' and you can actually get good information, and if you are 'confident' you can succeed.
heck even for a zero sum game like poker, which is in many ways similar to the stock market, you can still get decent education because the pocket cards/flops/bets are still quite finite and you can set boundaries on when/how much to bet.
this game of trading, there is ZERO edge you can get from reading books.. but a newbie wouldn't know... he will try stuff in them books... fail... he then try stuff he reads from the internet, like 'keep losses small and let winners run'... fail.. then he's lost.. like what the f should he do now lol.
only the very determined and very lucky few, eventually figure out without a mentor, what this game is truly about.
The more money you have, the less risk you take. Go out and spend it. I have wealthy friends, 25 mil and up. They don't trade, just spend . Sure they in invest in msft and brk, that's it. Most lose money trading. Financial advisors can accelerate losses, while they get rich. Sure you can grow a 1 million dollar account in 12 years. Got a million to start with. It's a piece of cake.
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This is the best advice offered.
You could follow the most prudent risk management and not make money. I don’t think that’s the definition of an edge.
If that is the determining factor to making money the stat provided by dozu would be greater than 1% make a living at it.
Profound. Goes against the conventional thinking.