There is but one correct method
- Thread starter Buy1Sell2
- Start date
Three more rules:
1. NEVER follow rules until you are sure that this is a rule that must be a rule to never be broken.
2. The inefficiencies in the market are not that large, so trade large size relative to your account and never more than 2 RT's a day.
3. Nobody has ever proven, publicly at least, that they really know the direction of the market on a consistent basis. First admit everyone could be wrong, and when the sht hits the fan you will be alone.
I think 2% is a good rule of thumb, but what if you have 100 million in an account and I only have 90k? Or, god forbid, less than 25k trying to make 100k a year? lol.
1. NEVER follow rules until you are sure that this is a rule that must be a rule to never be broken.
2. The inefficiencies in the market are not that large, so trade large size relative to your account and never more than 2 RT's a day.
3. Nobody has ever proven, publicly at least, that they really know the direction of the market on a consistent basis. First admit everyone could be wrong, and when the sht hits the fan you will be alone.
I think 2% is a good rule of thumb, but what if you have 100 million in an account and I only have 90k? Or, god forbid, less than 25k trying to make 100k a year? lol.
Thanks for the post--however these are not rules that are germane to the discussion here. We are discussing the general method of trading, not specifics to each person's system.
In answer to your question about the disparity of balances though--the 25 k trader will need to continue with another source of income for the time being and continue to only risk 2% of TLNW .
I agree, what you have described is what I call classical trading and can be read about in many books.Quote from Buy1Sell2:
Thanks for the post--however these are not rules that are germane to the discussion here. We are discussing the general method of trading, not specifics to each person's system.
In answer to your question about the disparity of balances though--the 25 k trader will need to continue with another source of income for the time being and continue to only risk 2% of TLNW .
Breaking the rules is another matter.
The older you get, the more enticing breaking the rules becomes, because you know there is less time for the law of averages to catch up with you.
And not only that
but looking back, you realize how much of the "classic rules" you survived were just luck.
not sure how I would approach it today if I was still young and had a lot of bad luck to overcome.
but when you get old, it is really fun to be a rule breaker
eh......i jusi watch
OK. I totally disagree.
1) The 1st rule is to find an edge. If you don't have an edge, the rest is meaningless since randomly trading will not make you money.
2) The 2nd method is to determine what you want your win% to be. Yes, with a lower win%, you need to let your winners run more. With a higher than 50% win %, you can have breakeven or sometimes negative risk to reward.
3) Scaling in or out depends on your system. If you are averaging in because you don't want to take a loss, that can be bad. If before you enter the trade, you have set stop, and plan to average in as long as the stop is not violated, and this is part of your trading plan, that can be fine.
4) If like me you use a chart to trade, then sometimes the chart of price will help determine the stops and targets.
If you trade without stops and targets and are profitable over the long run, fine. The problem of not having stops is when something goes wrong, lets say you are long a stock, and the CEO let with all the money and fled the country, your no stop is going to hurt.
1) The 1st rule is to find an edge. If you don't have an edge, the rest is meaningless since randomly trading will not make you money.
2) The 2nd method is to determine what you want your win% to be. Yes, with a lower win%, you need to let your winners run more. With a higher than 50% win %, you can have breakeven or sometimes negative risk to reward.
3) Scaling in or out depends on your system. If you are averaging in because you don't want to take a loss, that can be bad. If before you enter the trade, you have set stop, and plan to average in as long as the stop is not violated, and this is part of your trading plan, that can be fine.
4) If like me you use a chart to trade, then sometimes the chart of price will help determine the stops and targets.
If you trade without stops and targets and are profitable over the long run, fine. The problem of not having stops is when something goes wrong, lets say you are long a stock, and the CEO let with all the money and fled the country, your no stop is going to hurt.