Risk Management. The way to be a better trader than a child with a coin.


Thoughts about trading style, risks, money management.


Somewhere I've seen video about trading in terms of probability theory. It was about throwing a coin to get heads or tails. Thought was about a child - if the child will make trades according to the coin - it will be 50% win ratio if it will be enough number of attempts.

Trading statistics says that less than 20% or even 10% traders have positive results, while the rest are losing money. So... we have clear view that the child with a coin have Better results compared to Most of traders...

How can it be? While traders have such rich variety of indicators and strategies.

The answer is - according to probability theory - to have not losing, but at least 50% win ratio it must be "enough number of attempts". That is why - I have stopped to dream about 10-30% profit per trade - because with 30% TP/SL - if we'll catch 3 SL in a row - it will lead to lose 100% of deposit .

That is why - I have started to put TP/SL at 0.5% - 1% or 2% per trade, and now I have form 50 to 200 attempts to achieve positive trade results - it is a thick strong wall saving the deposit. And it is nice to have a scale to see possible profit/drawdown in percents directly on the chart and a tool that will calculate best position volume Before position opening - to fit desired risk at some stop level distance.