Anybody miss me??? I’ve not been around a while i.e. been busy ‘setting up shop’ as some will know. But that’s done now so time to ‘get on with it’.
I’ve not posted any of those ‘golden nugget’ articles for a while now (well: I’ve not posted much about anything for a while now as noted) but this is a good one:
It’s short. No question. So what’s so ‘golden’ about it aside from the fact that it’s written by Von Tharp??? Well the FIRST thing that’s ‘golden’ is that “[I]if you are a beginner and don’t know what you are doing yet.[/I]” then “[I]0.25% (of your trading account) is safer[/I]”!!! How many people do YOU know (yes YOU) that figure that they’ll risk MORE e.g. 5% - 10% per trade when starting out and will EVENTUALLY reduce their risk once they’ve grown their account to something substantial??? Sound familiar??? And SECOND thing that’s ‘golden’: “[I]one of the reasons that many traders go bust is that they don’t practice correct position sizing strategies and that most of the beginners are under capitalized[/I]” (stated in Von Tharp’s book). Sound familiar??? Heard it too many times before??? Well read it again then!!!
It’s a tough one (this) to be honest. J. Welles Wilder Jnr., as but one example, risked 10% per trade and up to 60% of his capital at any one time!!! One the other hand and following Von Tharp’s advice: most people shouldn’t even be looking at trading until they have enough capital and at 0.25% risk per trade it would make it practically impossible to start trading with $100 EVEN WITH nano lots but of course it’s trading system dependant too TO A DEGREE. When I tell people to not even bother unless they have at VERY LEAST $1 000 to start trading with (and preferably $2 000): they think I’ve lost my marbles. Why??? LEVERAGE BABY!!! A broker’s dream and a new or inexperienced trader’s potential nightmare!!! More and more I’m convinced that if you are unable to take a trade with NO leverage (requiring obviously far more capital) while simultaneously managing risk (whether it be 0.10%, 0.20%, 0.25%, or the commonly quoted 2% on the trade) then you shouldn’t be taking that trade or trading that particular instrument. I’m still of the opinion that would skew the 95% losers / 5% winners statistics SOMEWHAT!!! But it’s a hard sell to a client let me tell you!!! Doing it YOUR way though??? I’d say you’re JUST fine!!!
But I guess I’d better get off of THIS soapbox now i.e. it’s bad for business!!! LOL!!!
