|JetTrader ||Feb 11, 2020 4:20pm | Post# 177 |
It is good to see someone who caught on to the power of Magnitude and then uses it in their trading.
Swing Trading or Position Trading, though it has an extended event horizon for profit, can be a very effective way to trade for those with extended expectations for taking profit. However, if you get the Direction wrong and you don't use a stop, or you don't shift in directional bias by taking a smaller loss before moving in the opposite direction, losses will eventually mount up. It really depends on how long one wishes to sit and wait for profits and how much risk tolerance one can sustain if/when a large Magnitude trades starts to go against you.
Of course, gearing down lot size to the point of being just a little bit more profitable than a government issued security, defeats the purpose of growth of capital in absolute dollar value terms with a higher rate of speed. Yet, combining slow absolute dollar terms growth with extremely low position sizing inherently reduces risk naturally. The double edge sword of that fact being an equally slower rate of growth of absolute capital, despite higher returns ratios.
For these reasons, real capital growth is differentiated (different than) from net ROR. Ergo, it is possible to have an extremely high rate of return coupled to extremely slow rate of real equity growth. However, from a purely "trading" standpoint, cutting the noise, especially for the New Trader, is a fabulous way to learn about the market concept of Magnitude and why it is so important to Trading overall.