2020/03/18 ~ Mantras & Methods

• Trade within the (expected range) x 2 or less

  • Why expect more?

ATR is the easiest way to do this, but there are others like dynamic range and channel studies like Donchian and Keltner channels.  So target 2 times the expected range or less.

• Get better Rewards than Losses, ie R:R > 1

  • Be better at winning AND better at losing too.

So if you target 2xATR then your stop of 1.5xATR will get you a good R:R.  Look at your bar edges for the last few bars, and use them for “smaller than your target size stops,” as well as locking in profitable trades.

• Try to beat the coin flip

  • However, 40% profitable will be ok if you are good at the prior point.

50% winning in trading is actually hard to do, but if you win 40% of the time and can get a good R:R, then you will still beat the commissions by a little.  Remember most fail miserably, for lots of reasons, but a big one is losing on one trade much more than they win on any trade.  Winning 80% of the time is absolutely achievable, but you will have to throw R:R out the window!  Though when you master trading, you may disagree with that statement and have high win% and great R:R both, and that is the ultimate goal.  At first you need to balance them.

• Pile onto the good trades to get your money faster

  • The blackjack dealer is showin’ 16, and you can double down.

Breakout trades are terrible places to start trades, but it’s not so bad to add a little risk to a trade on a breakout.  For if you are already long, a breakout is a confirmation of your correctness in choosing to be long.  Get you some!  However, you will have small profits if you enter on breakouts to begin a trade.  This is will skew your R:R against you on the reward side.

• Don’t let decent winners turn into losers

  • Cardinal Sin!

‘Nuff Said.  But to offer a conceptual mindframe, just think that taking your winners (that have a decent profit) more often raises your winning percentage, and if you go flat with more money than you started, this ALWAYS helps.  Nothing wrong with reentering the trade.

~ B3 d^.^b