Trading to win using the Secret Code of the Illuminati

Letttt’s get ready to ruummmbbbbbbblllllllle

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Risk and Reward

Risk and Reward

In this corner, weighing 2500 lbs, mr market.

In front of that scrawny 100 pound shadow on the other side of the ring, there is me.

Following Jeff Cooper’s hit and run style of trading, I am outmatched as a super-flyweight and fighting up into the heavy weight ranks.

In sports, the normal mantra is the best defense is a good offense.

In trading, that type of thinking is dangerous to your wealth.

Think of jumping out of an airplane 100 times. 99 times your parachute opens perfectly.

On one occasion, however, your chute fails to open.

Care to speculate on the results?

The failed opening represents your defense, your ability to accept a loss.

The number of contracts you have on your trade represents the altitude at which you jump.

If your plane is on the runway (one contract), you can probably survive physically. Multiply your stress factor exponentially for each additional contract that you apply. 10 contracts is a 10,000 ft jump and will take you out of the game if you cannot manage your drawdown.

Risk control is so important in trading that in my opinion, all other factors and rules are subservient to the principle of defense is 80% of trading.

The knockout punch will come from nowhere, when you least expect it.


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