The difference between a profitable trader and an unprofitable one is often only a few bad trades. Remove those, and voila! your losing month (or year) becomes a winning one. I’ve looked at countless trade journals, and one of the common themes I’ve noticed is that if we eliminated the worst one to three losing trades, the equity curve would reverse from negative to positive.
No major overhaul is needed. And there’s no need to master some convoluted trade management trick. Just avoid those outsized losses, those negative outliers.
Perhaps they were a result of risking too much in a single trade.
Perhaps they were due to holding into earnings.
Perhaps they were due to bad trade selection.
Perhaps they were due to breaking a rule.
Identify the culprit and kill it. Your wallet will thank you.
Chart of the Day
Spot the Outlier
Here’s a trade journal with a decent win rate. But this trader is losing money. Why? Because of a single outlier. One. Bad. Trade. Can you spot it?
Video of the day
Docusign — Bull Put Spread or Bull Call Spread?
Coach Emily likes DOCU for a potential trade and the coaches analyze whether it’s a better Bull Call Spread or Bull Put Spread in this chart setup.
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Originally published at https://tackletrading.com on February 3, 2021.