I once worked with a guy who told me to keep my losses at 25 or 50%.
Good idea on paper, but doesn't help in trading as much as you think.
Here's why:
Let's say we both have a 500 dollar capital… you're capping your calls, long options play at 50%
And I'm getting wiped out in the bulk of the mine.
On the surface, that sounds like I'm not managing risk very well…which of course, sinks my win rates. And elevates yours to about 80-90%.
Now, what if your winners are only 25%, and my winners are 200%...
Who's managing risk better?
While you're risking two to make one, I'm risking one to 2x, 3x, 5X, and even 10x returns.
Believe it or not, risk management is all about potential reward.
And if you're not hitting these types of BIG rewards that more than make up for your losses, then you're doing it all wrong.
It's why I could have a 45-55% win rate and still remain more profitable than traders with an 80-90% win rate.
Because I'm ready to risk a 100% of my position for a potential 500, 1000%.
Just like I did again on June 21st…
When I called MU on a Thursday evening, and it went up 300% overnight.
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