I’ve been trading for about 15 years. Did a couple years full time but most of those years part time. I have traded just about everything - from sugar, to cocoa to t-bonds to currencies. When my funds are low I am drawn to currencies as its the only vehicle that will let you start with $100 and grow it into a few thousand. However, today I want to talk about the ultimate edge.
It does not matter what you are trading (corn, oil, yen, soy-oil) when you are playing with house money you have an edge that gives you an air of invincibility. Hear me out.
I could care less what your trading strategy is (as long as you have one) - once you get a trade to break-even, you are playing with the houses money and should have the confidence of George Soros! Ride that trade out knowing the worst thing that can happen is you go home flat. But the flip side of the flat coin is a trend that could last months!
Trust me - it takes some discipline, but once you catch one or two whales you will never be the same.
This is right. We all need an asymmetrical distribution with at least some big winners on the right-hand side, no big losers at all on the left.
In practical terms this means I never place a take profit order. As a long-term trend-follower, it makes no sense for me to be automatically taken out of a trade in which price was starting to accelerate in my direction.
Plus you should hopefully have a system that will generate repeat entry signals so that once you have passed break-even the same trusted TA system will allow you to double up, maintaining no more than your original risk.
I’ve tried to do this a whole bunch of times, but it’s never worked out. A few times I’ve had huge profits (+20%) but continuing to let them ride always closed them at break-even Maybe one day…
Well, if you’re following a well established trend, you’ll look for a local entry signal to open the trade. No trends continue for ever so you also need a local signal that gets you out, as the trend shows signs of slowing. It might even be about to reverse so at this point, close the trade and bank your profits. Of course, the trend will possibly not reverse, just pull back a bit, so be ready to enter again as soon as it resumes. Etc. etc.
Maybe one day…