You lose whatever you risk when tails comes up and you win twice what you risk when heads comes up. If R stands for you risk, this system is characterized by the two R-multiples it generates: 1) – 1R (when you lose, you lose what you risk and R stands…
Category Archives: General Forex
How to Handle a Losing Streak
Don’t overtrade. If you are trading several markets and not having any success, cut back to trading one or two markets. You can follow fewer trades more closely and document your success or failures more easily. Plus, your trading account won’t be drawn down so quickly.
The Why Wall Street Doesn’t Know About Position Sizing
This week I’m going to be a little controversial because I’m going to put forth some rather bold statements. First, it is possible with small amounts of money and a reasonable trading system to make outstanding rates of return (50-100% or more) through position sizing. Second, if you have too…
"Follow-Through" — It’s Significance for Your Market Position
Patience is a virtue in most endeavors in life, and it’s certainly a valuable asset in futures and stock trading. You will many times hear me use the important term, “follow-through,” when I discuss significant market moves such as price breakouts or trend changes.
Position Sizing Is More Important Than You Think
Before we discuss this topic, let me give you some important background information. I tend to think of trading systems by the distribution of R-multiples that they generate. And the average R (or mean R) of the system’s R-multiple distribution is the expectancy of the system. It tells you what…