/biz/ - Business & Finance

>>56383025
I'm a big proponent of risk management and trade psychology and agree on being consistent.

If you flip a coin (going long on heads and short on tails), you should be right approximately 50% of the time. Let's say you have an indicator that gives you a baseline or confirmation and you can avoid 1-2 bad trades and that pushes your win rate to 51% - you are now longterm profitable.

Another thing is cutting losers and letting winners run. If you have a perfect 50% winrate, your distribution on individual trades should be a bell curve. If you hold losers and cut winners, you shift the bell curve to negative ROI%. If you consistently avoid bad entries, cut losers, manage risk and let winners run, you shift the bell curve to positive ROI% for free. It's all about managing trades.

The problem is that while I understand this and have started doing this with biotechs (as mentioned >>56383040), it's not quite profitable yet. In aug/sept I did 10 trades (1 option) and was down $300. Of that $300, I paid $110 in fees, $60 on the option loss. If I avoided that trade entirely, I'd have cut my losses in half. So avoiding things like that. Sept/Oct was much better - $140 in fees, but only a net $60 loss so far.