<<you mean reverse engineer a financial target (requirement) eg $5m by age 60? and then take that into designing and trading a system accordingly including factors such as position size and expectancy? >>
That's one way to do it I suppose. Again, it depends entirely on what you are trying to do - and there are as many "criteria" as there are people I suppose, and a criterion can have one (e.g. "Make as much money as possible in 2018, all else be damned!") or many facets ("Make 10% in 2018, without exceeding a 20% drawdown, without paying more than 6% to create such a hedge, and keeping within a Sharpe ratio of X, with no more than 10% exposure to any one sector...andd yah balh blah ybbidt blibbidy").
It ALL depends on what you are trying to accomplish, and that includes not having an open-ended time frame.
And once someone defines their criteria specifically, like this, that is what dictates not only their money management, but their trading as well.
I know it sounds dry, plain, boring, pedestrian, as sexy as sweat sock and not worth anyone's time to do. The rejection of doing this, at the outset, however, is indicative of how serious someone really is about tradin OR if they are like the guy at the casino with his life savings who thinks he is there to make money, but, actually, is there for just expensive entertainment.
And having a criteria, and the degree to which is is specified, I have found to be the biggest determinant to success or failure at any of this.
Good question. I have traded my entire account on one position and been lucky, other times punished severely. I always regret not getting out sooner than I did when I had a loser. Using stops EVERY SINGLE TIME (ie discipline, plan)would have saved me many times. I was greedy. Making money> not losing money> losing money. "the quick and the dead" . which one are you? The best trade I made was holding a good company for a while. For me it was facebook, still in it after buying around 75. But that is investing not trading.When I trade small and risk 1 to 2% per trade (on daily chart)I get bored and cannot handle tracking multiple positions for bigger moves. Everything seems to move in slow motion and so I exit early out of frustration
When I break the text book rules and trade over 50% on a stock and hold for a couple of days, I consistently make good money most days ( with a stop below entry candle). My logic being is in an uptrend with a 60% win rate, how far can a position move against me ie. not far at all)
When I go back to small position sizing I revert back to small profits and meaningless trading.
What's going on? Am I wired backwards and destined for continued success by trading large? Or are the textbooks right and I am due for a big fall?
This has been my observation for a couple of years. I try to trade like the masses are told but only sabotage myself.
My logic is to hold for a shorter period so emotion has less time to mess with my trade.
When I trade small and risk 1 to 2% per trade (on daily chart)I get bored and cannot handle tracking multiple positions for bigger moves. Everything seems to move in slow motion and so I exit early out of frustration
When I break the text book rules and trade over 50% on a stock and hold for a couple of days, I consistently make good money most days ( with a stop below entry candle). My logic being is in an uptrend with a 60% win rate, how far can a position move against me ie. not far at all)