I like the KISS approach.
But I can assure you money management is not an edge. Money management just keeps you in the game longer.
The premise of this approach seems to be" price is either going to go up or down, so if I have a 10 pip stop and a >10 pip target overall I will make money", sorry that doesnt work.
If you had a 10pip stop and a 10pip target you would on average have a 50% win/loss ratio and would be flat ticks after 100 trades, however you will be down from costs and slippage.
If you had a 10pip stop and your average win was 30pips you would on average win 33% of the time and be break-even on ticks (after a large enough sample, say 100 trades) but you will be down costs and slippage.
You HAVE to have an edge to push you past the random entry and costs involved in trading. To use the average win = 3x greater than your stop loss example, you would need to have an edge that pushes your win rate up from the 33% you would achieve through coin flipping. You would need to make a statistical "prediction" that is correct 6-7% more times than random.
This is achievable, with respect Rumpled One, your approach does introduce some sound concepts in terms of money management, but your focus should be more on explaining WHY trading a breakout of a previous bars high or low has a statistical significance.
But I can assure you money management is not an edge. Money management just keeps you in the game longer.
The premise of this approach seems to be" price is either going to go up or down, so if I have a 10 pip stop and a >10 pip target overall I will make money", sorry that doesnt work.
If you had a 10pip stop and a 10pip target you would on average have a 50% win/loss ratio and would be flat ticks after 100 trades, however you will be down from costs and slippage.
If you had a 10pip stop and your average win was 30pips you would on average win 33% of the time and be break-even on ticks (after a large enough sample, say 100 trades) but you will be down costs and slippage.
You HAVE to have an edge to push you past the random entry and costs involved in trading. To use the average win = 3x greater than your stop loss example, you would need to have an edge that pushes your win rate up from the 33% you would achieve through coin flipping. You would need to make a statistical "prediction" that is correct 6-7% more times than random.
This is achievable, with respect Rumpled One, your approach does introduce some sound concepts in terms of money management, but your focus should be more on explaining WHY trading a breakout of a previous bars high or low has a statistical significance.
