The trading skills you need now - Vol. 3
Good work as always!
This is Nobushi.
It's a three-day weekend in the world, but how are you spending it?
As for me, I adjusted patients' appointments and ended up with a four-day weekend!
Despite being a free-spirited dentist as usual, the hospital itself will still be operating during the break,
and you can’t really provide good treatment if you’re cramming too much anyway.
In the end, the patients bear the brunt, after all.
Let’s take it easy and go at our own pace!!
Now, today is...
The third installment of my sales skill series,
The concept is
“I won’t say anything too hard—just know this much!”
That’s what I’m introducing.
This time...
③What is the target range for the allowable loss per trade?
That’s the question.
This actually came from a Winner user’s question, so I’ve thought about it in my own way.
Personally, I actually vary the allowable loss per trade,
because when the entry follows the Winner signal, depending on the higher time frame or the currency’s background, there can be bullish or bearish scenarios.
When I’m bullish, I widen the allowable range; when bearish, I sometimes cut it at 2–3 pips.
If I answered like this, it would probably lack concreteness and I don’t think it’s what the questioner wants to hear, so
I spoke with a sharp-trader friend (Person A) to get the real details!
I’ve summarized a concrete money-management method, so I’ll share it!
According to Person A...
“You cannot win 100% by keeping the allowable loss fixed every time.”
To add, Person A did not agree with fixing the remaining capital to a fixed percentage of loss allowable.
In other words, if you set 3% of the balance as the loss-allowable each time...
If you hit six consecutive stop-outs, you’ll reduce your starting capital by 83.3%.
If that happens, even continuing with the same 3% gain target won’t recover to the original capital,
and you’d need seven consecutive profitable trades.
That sounded complicated, but in short
“Change the allowable loss per trade according to the balance!”
That’s the conclusion!
If your balance drops, you’ll have to lower it to 2%; if it grows, you can raise it to 4%, etc.
In that sense, discretionary skill is indeed necessary.
By the way, what about changing the allowable loss by market conditions like me?
When I asked Person A,
“That’s fine. If you can do that, it’s best.”
He said.
Of course, if you misread the market, losses can be large, but
the basic trading principle is to take profits when you can.
So that’s also good!
That’s the idea.
By the way, there’s also a method that fixes the loss per trade in pips width, right?
That isn’t fixed to a certain percentage of account balance, so it’s somewhat different from what we’re discussing now, so be careful!
Now, the conclusion!
“Change the allowable loss per trade according to the balance!”
That’s it!
p.s.
Personally, I’d like Winner users to be able to manage capital with discretion.
That’s why I’m making it.
However, it doesn’t come with discretionary power overnight, so I hope there will be a place for Winner users to discuss among themselves.
Right now, I’m debating one-on-one with each user, but there are some traders with sharp ideas, so I’d love for everyone to hear them.
If you have a good method, I’m open to suggestions.
Winner introduction video: https://www.gogojungle.co.jp/finance/navi/15/17609
Original indicator “Winner” public page: https://www.gogojungle.co.jp/tools/indicators/17623
