Are you tired of being chopped around in manual trading, have accounts getting liquidated and overall have no consistent success in the markets? Do you want to preserve mental capital in order to make the right decisions on the moments that really matter, trade from a probabilistic state of mind with the proper risk management? Then this strategy is for you!
The objective of this indicator is three-fold to let you make consistent gains within the market, irrespective of market direction
- Preserve mental capital by automated entry
- Trade from a probabilistic state of mind
- No risk of account liquidation on a single trade
Losing trades are unavoidable and have a 100% chance of occurring at some moment in time. These trades are necessary in order to make yourself available to the winning trades. Similar as to a business, a trader will incur losses which in fact are operating costs to be active in the market.
Key to consistent success is to pre-define the risk we are willing to take on a trade. This risk level also needs to be in line with the probabilities around having consecutive losing trades in order to avoid a large drawdown.
Within the dataset we have not seen consecutive losing trades, however when looking at statistics we can determine that with this strategy there exists a 1% chance of having 4 losing trades in a row. Using our formulas we therefore conclude on a risk level of 5.0 – 8.3% per trade.