Monday November 28, 2022 - 10:48:47 GMT
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Don't Trade to Avoid Losing, Trade to Win
I was watching a movie on Netflix when one line caught my attention. A swimming coach, reflecting on his own failure, gave a piece of advice to a struggling swimmer. He said, "I was swimming to avoid losing, not to win."
It caught my attention because it is a similar issue facing many traders, who trade to avoid losing and not to win. It is the fear of losing money on a trade that:
- restrains traders from taking risk and putting on some trades
- has traders taking profits too early rather than letting them run to a target while letting losing trades run until stopped out
If this sounds familiar read on:
Whether you are just a retail trader or one taking a prop trading evaluation test you need to be consistently profitable to build equity in your account. To do this, you need to trade to win.
Trade to win
Here is a way to trade to win using a risk management strategy developed by The Amazing Trader (AT) that overcomes a trader’s fear of losing money on a trade.
1) Preset your risk/reward to 1.25:1 (I.e. profit target = 1.25 x cost of stop).
2) Execute a trade as illustrated in the following
It’s time to win
The logic behind the strategy is that you make more money when right than wrong on your trades.
Think about it. If you only achieve a 50/50 win/loss, at a minimum, you will be profitable and build equity in your account using this strategy.
So, the more you trade the more money you will make as long as you can maintain at least a 50/50 win/loss on your trades,
Results are based on simple math and The Amazing Trader gives you the tools to achieve it.
Let’s say you risk 1% of your capital pet trade
You make 1.25% on winning trades
So, based on a 50/50 win/loss the average gain in equity would be 0.25% per 2 trades.
+2.5% for 20 trades
+12.5% for 100 trades
+125% for 1000 trades
You don’t have to worry about losing trades. They are just part of being a trader.
This is not an issue with the AT risk management strategy. You are always risking the same percentage of your capital per trade and making more with winning than losing trades.
As I noted, the more you trade, the more equity you will build in your account as long as your win/loss is at least 50/50 (imagine the results if you score more than 50/50 on your trades).
So if you are looking to forget about losing trades and start trading to win, send jay@theamazingtrader.com an email and ask about end of year specials.
Jay Meisler
Co-founder global-view.com
Creator, The Amazing Trader
jay@global-view.com
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