It’s not that I’m not aware about position sizing (I actually began to trade with micros) it’s just that this kind of position sizing is a part of my strategy. When I’ll begin trying my structure based strategy live I won’t be using such risk (at least in the beginning).
But you can use it if you know what you are doing and if you are extremely confident with your strategy (not that it will never lose, you will lose but you will know you will be able to recover from your losses).
The only way you will hit 12 consecutive losses is if your strategy or your execution is bad. I actually have less chances to lose 10 times in a row than to win a lottery.
The market is never about 10 losses if you know what you are doing, it’s about two steps forward one step back, one step forward two steps back…two steps forward.
But sure newbies shouldn’t trade that kind of amount. Actually the micros are very good for training.
Thousands of people have thought so, and messed up. They are - universally - [B]not[/B] people who are trading for a living.
As explained above, the main problem you face with the position-sizing you’re advising and defending isn’t a [U]run[/U] of 12 consecutive losers: it’s a long [I][U]patch[/U][/I] in which losers predominate over winners by about 3/1 or 4/1. [B]That’s far more common, and will wipe out your account just as relentlessly.[/B]
I don’t mind you having deluded statistical/probabilistic beliefs, but it concerns [I][U]many[/U][/I] people here when you use them as an underlying basis for offering others dangerous advice. Again, if you read one of the beginners’ books recommended to you in so many threads, you wouldn’t be saying the things you’re saying.
Seems like you are missing the fact, that if you lose you have to win more, to be at the same amount again. If you risk 10% and have 4 or 5 losses (which is not uncommon even with a 80% or 90% winrate), and your equity is down to 60% or 50%, then from that you have to make 66,6% and 100% gain respectively, just to be at the exact spot where you were before the losing strike.
While you risk 1%, then you are down to 4-5%, and you have to make 4,167% or 5,26% gain respectively, just to regain your losing strike. What is so complicated in comprehending this?
So if I understand it right, you are not trading live with 10% risk, and you don’t even plan to. Yet you give advice with confidence, because theoretically it seems like it could work. Lexys is right, lots of people are just giving advice from the top of their heads. Man, on demo I can go double or nothing all the way.
In a very small sample size with a small account, hence the “doesn’t matter if i lose it all” risk profile, then high returns are possible but consistency is not as it requires a larger sample size statistically before the curve settles down to a steady state.
Try telling someone who won the lottery that it’s impossible to win the lottery, you can’t, but is it good career advice to tell people that you can make a good living playing the lottery?
Making a big profit is almost impossible with what you have mentioned. In my calculations it is too difficult and hard to follow. I don’t know about Forex experts; but extremely difficult for a new comer. But thanks for your suggestion.
This is right, if you risk X%, you then need to win 2X% just to get back to where you were before that loss. So, if you risk 10% on one trade and lose it, you then need to win 20% just to get back to the level before you lost the 10%. It is a lot easier to win 1-2% than it is 20% in one trade. It is not going to make you a multi-millionaire overnight for sure, but if you want to succeed as a trader, that is the price to pay.
As far as someone saying they are trading with 10% risk in demo, even though they do not intend to trade that way for real is kind of silly, unless there is another purpose in mind, like trying to win one of those trading contests. But regular demo trading in a way that you do not plan to use live does not sound like a good practice habit to get into.
You are right.
I am personally using a very special strategy which is high probability and in the same time it has a risk reward from 1:3 to 1:6.
So I really don’t care about having a drawdown, i know that I can lose 3 times and win only one to be in breakeven. I don’t need to rush at all and trade more in order to bring the money back. I am just following my plan.
But I wil listen to your advice and trade with a 2% risk. It is about 10% of return on investment per week so I am good with that.
