Category Archives: Trading

How the Winning Rate of a Trader Can Fool You

A very common mistake of inexperienced people comparing trading systems is to put the greatest importance on winning rate. Let’s take 2 traders with 3 years of track-record each. Both have an average annual return of 40%. Trader A has a 75% winning rate, and trader B a 35% one. That’s all we know about… Read More »

Successful Traders Develop And Stick To Their Own Strategies

There is a popular myth among those who are just starting trading that professional traders have many strategies that allow them to be very profitable all the time. That they can make a lot of money month in and month out by applying one strategy if the market is trending, another one if the market… Read More »

Does Your Trading Strategy Have an Edge ?

Having a strategy with an edge is often mentioned in trading literature as a prerequisite to success. Despite this fact, I think it’s still a misunderstood concept. Why am I saying this ? Well, ask yourself, or other traders you know, what exactly is your edge in trading ? In other words, what makes you… Read More »

Why Is It Best Not To Have Open Positions Over Weekend

Never trade in situations where you don’t have control. – Paul Tudor Jones This week opened with a big gap for GBPpairs (153 pips on Gbp/Usd, 190 pips on Gbp/Jpy, 72 pips on Eur/Gbp). The reason behind this big move is considered to be the result of another poll about the Scottish Referendum. As I… Read More »

What’s Your Monthly Profit Target ?

That’s a quite popular question in the trading world. Together with its variants, ‘what’s your daily, weekly, yearly profit target ?’ it offers one way to gauge the trading experience of the person who asks. In most cases it will come from beginners and it’s the scope of this article to show why it is… Read More »

No One Knows Anything – The Folly of Explaining Price Movement

Let me state right off the bat that I’m not excluding myself when I say no one. Having clarified that, let’s delve into one of my pet trading related subjects. After I became interested in the markets, I used to look up to the nicely dressed, confidently sounding analysts who could explain every day’s movement… Read More »

Size Does Matter: Determining the Size of a Position

This is a continuation of my previous article here. I want to talk about the logical link between the risk we assume on an initial trade, the sizing of that trade and the expected reward. I already mentioned before that my preferred risk is no more than 0.5% of equity under management. Let’s see how… Read More »

Patience – Mandatory for Successful Trading

After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! – Jesse Livermore Ask the average trader what it takes to have… Read More »

Less Is Better – How I Determine Risk in a Trade

I consider risk control to be the most important aspect in trading. A lot of people might disagree with that, but I know that successful traders who’ve been at it for decades share my view. The most important rule of trading is to play great defense, not great offense. – Paul Tudor Jones The most… Read More »