Episode Details

How to determine the best trading methodology for you

Published 6 years, 2 months ago

Trading systems have different accuracy rates and ratios between winners and losers.

Knowing these ahead of time might better help you determine which is most suitable for you - at least to start with.

A trend following model might have 30% winning percentage with winners being 3 times the size of the losers.

A chart reading model might have a 70% winning percentage, but a winner / loser ratio that might be smaller than 3:1.

Both can have a positive expected value of a trade, so they can be worth following.

One might be a better fit for you although both are expected to make money.

Of course, knowledge of yourself first is the best way to evaluate trading rules when determining compatibility.