The best trader is the most risk adverse trader

Based on that if you allowed yourself to risk any amount of money on any of your trades why do you like me to be taking your biggest risk and therefore take your biggest losses. It will come just after winning streak when you’re cold and you’re risking more just before you end up losing, what I find is that when you do take that loss after winning streak most traders if they’re risking any amount won’t reduce the position size down because of the contrast affects.

They get used to using big position sizes and the position size now doesn’t reflect the lower amounts of capital loss becomes even bigger. And then of course it’s like what John Coast says they start going the other way and become irrationally risk-averse and not want to actually open trades in the right way. So what this means is that you build up your PNL in slower increments and then as it starts to build up a little bit faster, you’ll encounter a big drop at the height of your confidence before going through that slow climb back up once again. This is an issue most funded traders encounter. Instead if we have a 2% maximum risk of a cap on any trade it means the oppositions will be nicely contrasted none are excessively higher or lower percentage wise, now in reality we recommend the traders use a smaller position sizes for each trade and decide their own limit for themselves based on their risk profile and other factors.

But we don’t really recommend going above 2%, but you can choose yourself when starting out. Second order competence is a mindset development in a linear process where you can develop competence and eventually become an expert like playing guitar you get better and better until most people, the financial markets are constantly changing the markets are the one particular approach in one type of market and expect to work the same way forever and ever. Off course the principles follow a different context, but you get the jist of what I’m saying. The market will always change and you need to adapt to the pattern.

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