DislikedThis video is a must see for all aspiring traders ... basically it explains why most of us fail - and if you risk 10 % per trade you will fail sooner or later
http://www.youtube.com/watch?v=MUfdE...layer_embeddedIgnored
Well then by his figuring and the explanation he has given with the decreasing returns with increasing risk then all I would need to do is risk .00000001% and my returns will be off the chart. The opening example is just stupid as all he has done is grab a magical figure of 100 pips SL and drawn conclusions from that.
Hanover has said it a million times, MM will not make an unsuccessful trader successful by itself, it requires more. Money management may be key but taking a bigger risk on a higher probability setup will generate far greater potential than just trading 1%.
And back to the start comment, I do not agree with his maths. Under no circumstances have I ever found based on set figures, does lowering the exposure lead to higher returns.
Based on 1% of say $10000 on a 50/50 outcome the total is always going to bleed. No alteration of the risk amount changes that outcome. However higher returns, say 60/40 Win/Loss average, the higher the risk the greater the returns regardless of how you balance the wins and losses. The only difference between to the two is that over the top risk with a string of losses will lead to margin calls. On the other side of the coin, large risk on a win streak will lead to large gains.
Having a set % risk for each traded and risking less does not guarentee you making money. Unless you are over time averaging more winners than loosers you will bleed slowly. Risking large amounts more and more open the flood gates and could potentially leave you mortally wounded. Take care, do your homework and balance you MM on the strength of the setup among other things. You will know when something is not working out in the manner you have expected, take the loss and move onto the next one.
RT