It’s a funny world.
In this funny world, many people work for less than 1:1.
Many of these people don’t have a choice. Their circumstances are such.
Some do, and they still choose losing odds.
What are we talking about?
The reward : risk ratio.
In the marketplace, our risk needs to be defined by default.
If we’re not thinking about defining our risk pinpointedly before entering the marketplace, let’s just pack our bags and study music instead, or biochemistry, if you please, with no disrespect to either music or biochemistry.
Define your risk! Set a stop!
Nobody plays to lose, right?
Once the risk is understood, one starts looking at reward.
Reward potential must be at least equal to or greater than the defined risk. This statement, coupled with a large sample size and more than 50 trades moving your way out of every 100 is already a winning combination.
Anyone can pick 50:50. All you need is a coin-flip.
60:40 is definitely achievable with research.
You don’t need more to win big.
Now make the 1:1 work for you. In 40 out of 100 trades, you’re stopped out at – 1 (minus being for trade going against you, and 1 being your defined unit of risk). I know it’s difficult to do, but take the next trade with a smile. When a trade starts to run, don’t cut your profit at the +1 level. Let your profit run.
At +1, lift your stop to 0. At +2 lift your stop to +1. So on, so forth.
Don’t exit manually.
Let the market throw you and your profit out.
That’s called a proper exit.
I had promised that I would be speaking about proper exits.
Well, there you have it.