Do you know what separates professional traders from losing traders?

Here's my answer and it's not what you think...

How position sizing can affect your trading performance-

Assuming that you are trading a Trend-following system with Big RR and low win-rate.

For example, assume that you risk one percent per trade on a 100,000 account
and you have 20 straight losses.

That one percent is of your remaining equity and at the end of 20 losses, you would be down to 81,790.60.

Now if you got a 30R winner and you are risking one percent of your balance of 81,790.60, your new equity would be 106,327.9,

You’ve had 20 losses and one winner though you are still up 10Rplus your equity is up by 6.3R percent.

Now, let’s say you risk five percent per trade on your balance. At the end of 20 straight losses, you would be down to 35,772.89 or down 64 percent.

If you risk five percent on this amount and get a 30R winner, you would be up to 89,621.48. You are up 10R, but because of your position sizing, your equity is still down over 10 percent.

#positionsizing
#Trading
#nifty50

This is why position sizing is the most important factor in trading if you get it right and you have an edge, you will do good.

Thanks for reading till here.
@AnandableAnand @jitendrajain @quatltd @sohamtweet

FEAR - It’s the re-experience of failure in advance.

Many traders face the issue of Not entering in trades because of fear.

A thread on How to pull the trigger when the opportunity knocks.

Lets First start from knowing the cause of this "FEAR" of pulling the trigger.

A traders goes through many phases before becoming Profitable.

The first phase is the " APUN HI BHAGWAN HAI" phase-

When we first begin Trading, we don’t know any concepts, we don’t know about the risks , the dangers.

So we start trading, and like most guys by beginners luck we start making good, we start to calculate how much money we will make in next 1yr, 5 yrs, Greed start to Hop in.

We get introduced to Various instruments, F&O, LEVERAGE.

We take big positions as we don’t have any FEAR cause we haven't seen those bad phases yet.

Now we get the Big blow, account down -50%, or in many cases wiped out.

The first phase ends here.

Now we know How the market can kick our ass, we now know the risk that comes with those big positions.

"THE LEARNING PHASE"-

Now we know that we were just lucky initially and now we have to learn why we get those losses, so we start learning concepts , fundamental, Technicals.

Everyone should own a digital asset that earns $2,000 per month.

Here are 10 dead-simple ways you can make your First $1 online (from people who actually did it):

🐦 Analyze viral Tweets

1. Get Twemex (free chrome extension)
2. Find influencers with viral tweets
3. Identify why they went viral
4. Put your analysis on a document.
5. Upload it to Gumroad
6. Sell it

H/t @BrianFOConnor

🔢 Extract data from yellow pages into excel

1. Find a B2B/B2C niche that needs offline data
2. Choose a digital platform (Excel, Airtable ..)
3. Move the data to the digital platform
4. Hire someone on Fiverr to do it
4. Sell it on gumroad

H/t @SachinRamje

🎨 Design flyers and graphics

If you are good at designs:

1. Find a niche (ex: Vegan resturants)
2. Create a profile on Upwork
3. Upload a portfolio
4. Start with a low charge per hour/design
5. Steadly increase your charge

H/t @abdussalampopsy

🏋️ Become a coach

1. Decide on a target persona
2. List down your achievements
3. Update your social profiles
4. Create a calendar account
5. Create content with CTA to book a call

H/t @OllieEmberson

Knowledge sharing initiative Book 3: "Zurich Axioms" by Max Gunther

The book crystallizes how to think about taking investment bets (position sizing), and how to reduce risks in investing & speculation. It focuses on teaching a balance between rewards & risks.

(1/n)

Here are the key takeaways from the book:

1. Take sizeable bets in life: Taking small bets will give you a good night's sleep as you have very little to lose, but the important point is "it won't ever make you rich".

(2/n)

2. Taking size-able risk is necessary to get rich but make sure you don't go bankrupt taking that risk.

3. Don't diversify too much as gains & losses will nullify each other.

(3/n)

4. Be less greedy to make money - Book some profits when you see a sudden huge increase in wealth - fear of regret will stop you from booking profits but don't be greedy as consistent streaks of lucks are rare in life.

(4/n)

5. Cut losses when you go wrong don't start praying that your losses will recover rather act quickly take some loss and sell out.

(5/n)