In this 6th and final web tutorial of the series, you will clearly see demonstarted, that seeking greater points when in a winning trade, is not always the optimal exit strategy. Probability plays a major role in the decision making process. Remember, the more points we strive for, the less likely we are to ever get there. How many times have you been profiting nicely in an open trade only to find yourself stopped out with at best a break even. What is even more likely to occur and is the focus of this tutorial series, is when you opt to scale out of a winning trade ,taking some profit at your 1st profit target. You then hold the balance of your contracts (or shares if you trade stock) in the market in the hopes that the profitable move will continue in your favour. Enter probability - your quest for larger profits loses momentum, the market reverses and you are stopped out with a break even trade on the balance of your position. You are left with the all too common feeling of "damn... I would have been better off closing the entire position with my original profit target" These are the dynamics at play - constantly. The market is incredibly fluid and without the proper tools at your disposal - youre playing at a dis-advantage. Personally, I also enjoy trading options contracts with a percentage of my trading capital and I can assure you, I wouldnt even attempt to intiate a trade with real capital without a platform that allowed for me to model out all my risk reward metrics before hand. The same can be said of directional trading. Whether you know about all the intracsies constantly at play or not really is irrelevant. Just know they are there. There is far more to being a consistently successful trader than leasing a mechanical trading system which tells you when to buy and sell. What about your risk management to your trading capital? What about your position sizing in the even this is a lsoing trade. Finally what about the probability factor - accepting that your not going to always earn 10, 15 or 20 points per trade. When you fully accept the importance of each of the above, then you will realize the importance of the m3 Money Management Modeler to take your trading to the next level.
By no means is this the end of the learning. For this series of web tutorials I hopefully have opened your eyes introducing you to some key concepts through the use of the m3. I will continue to post daily blogs and web tutorials utiliszing m3's capabilitites and introduce new and thought provoking concepts surrounding the core capabilities of this platform, those being risk management,position sizing and probability.
click the link to view the final web tutorial in this series