2. 3 tips for creating bigger winners and reducing losses
In this video I give you very practical tips on how you can improve your trades overall. When it comes to improving trades this is what we can achieve:
- Improve the Reward:Risk ratio (RRR)
- Improve the exits for larger winners
- Make sure price hits your take profit
- Reduce the size and quantity of losses
- Avoid stop runs
- Improve our trade management and avoid mismanagement
Most traders want all this but don't know how to get there. Or, they just randomly change their trading. There is a better way!
And for that we focus on a few metrics:
- The Updraw and Drawdown
>> Those two metrics tell us how close price came towards our profit target and stop loss.
>> If we see that price, on average, does not come close to our stop loss (low Drawdown), we are setting it too far away. Reducing the stop size can help us improve the RRR
>> If we see that price often turns ahead of our target (high Updraw, but below 100%), we might want to set the target a little closer
- Potential performance
>> Looking at how much money you are really leaving on the table by mismanaging trades can be an eye opener
>> In Edgewonk, the potential performance metric is unique and it tells you immediately how to correct your behavior and takes out the guesswork
- Simulator
>> The simulator takes your own performance data and simulates a potential account development for you
>> See immediately what to expect from a risk perspective so that you can be prepared better. Or, adjust your risk to avoid large drawdowns
