This 1% risk is a function of two flexible components:
• Your Position Size: % of your account in the trade
• Your Trade Risk: % between your entry price and your stop loss
If I stuck to this one rule the day I started trading I would have...
• Saved $1,000's of dollars in losses.
• Sped up my learning process.
• Avoided every major account drawdown I've had.
If you're new to trading, make sure you stick to this 👇🏼
The 1% Rule 🧵
This 1% risk is a function of two flexible components:
• Your Position Size: % of your account in the trade
• Your Trade Risk: % between your entry price and your stop loss
Trading a volatile stock? Size down on the trade.
It's great to make money, but worthless if you don't have a system to keep it.
Over 50% of my trades are losses, but I'm still profitable because of the 1% Rule.
Keep losses small & let winners run!
New traders are EXACTLY who benefits the most!
By limiting each trade's potential losses to 1% it will take you:
• 29 straight losses to fall 25%
• 69 straight losses to fall 50%
It's tough to be that consistently bad 😅
This doesn't mean overtrade. But it'll be nearly impossible to blow-up your account if you stick to 1% risk per trade.
This is how you speed up your learning process.
Go through your past trades. How much $ would you save if you eliminated every large loss.
No bag holding, no averaging down, no emotional attachment.
You INSTANTLY become a better trader.
Risk, at most, 1% of your total portfolio on each trade.
Portfolio Risk = (% Position Size) X (% Trade Risk)
Guarantee a trading career with no large losses!
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So the cryptocurrency industry has basically two products, one which is relatively benign and doesn't have product market fit, and one which is malignant and does. The industry has a weird superposition of understanding this fact and (strategically?) not understanding it.
The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.
This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.
The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."
This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.
If everyone was holding bitcoin on the old x86 in their parents basement, we would be finding a price bottom. The problem is the risk is all pooled at a few brokerages and a network of rotten exchanges with counter party risk that makes AIG circa 2008 look like a good credit.
— Greg Wester (@gwestr) November 25, 2018
The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.
This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.
The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."
This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.