Your job as a trader is to make 2R per month, every month

A thread...

Let me start with the definition of R

R=Risk, the points between entry and stop loss

Entry 100
Stop 98
1R=2 points

So in order to make 2R you’d need to get 4points in this example

R can be any amount

2R a month isn’t a lot, it isn’t really hard to achieve

It can be done on 1-3 trades per month

How many times have you spent all month trading day after day glued to your monitor for 6+ hours only to walk away with a loss for the month?

Are you hanging on to every headline hoping they pass a stimulus bill?

Did a ZeroHedge headline convince you to short a breakout and then held on too long only to stop out?

Do you trade any asset with a “good looking” chart?

Do you use a default position size?

Do you have a trading strategy that you’ve rigorously backtested, manually?
Do you have train & test metrics?
Can you compare your live metrics to test metrics to know when something is broken or a perfectly drawdown?

Did you know there are only 3 types of directional trades?
Do you know what they are?
Did you know that all profitable strategies are based on at least 1/3 of these setups?
Do you know how far each setup is most likely to travel to properly manage the trade?

If you cant answer yes to everything here, you should only be trading 1 single setup

You should only take 1 trade per week, forcing you to take only the best setup

You should spend the rest of your time answering the above questions until you make a 2R per month consistently

This is how you play long term positive sum games that compound and will allow the correct use of high leverage safely

The difference of 2R per month of 1% or 2% risk over 10 years is as youd expect dramatic

The key is getting 2R per month consistently off of 1 single setup/strategy

Once you learn how to make 2R you can then learn how to make 3R consistently and so on

Or you can apply higher leverage to double down on your 2R efforts

The answer to your money problem isn’t in gambling on a political headline or trusting the CEO+board+employees+market+investors+the moon/sun&stars to align for a stock to go up

You are the answer to your money problems

There is a clear mathematical path

A quote from @naval

“Play long term positive sum games with long term people”

I’ll add, trading seems the opposite of long term, which is why it’s so easy to fail

Invert, and make trading a long term positive sum game, then you will attract long term people & apply leverage

You will repel short term get rich quick, zero sum people, who really cant help you anyway

But you will attract long term positive sum people who understand math (compounding)

Trying to out think the market is the ego trying to prove to itself that you are smart

The risk/reward here is skewed against you

If you are right you you convince yourself that you are smart (status quo), but if you are wrong, this shatters your view of your own intelligence

Where as a mathematical edge doesnt require playing these poorly skewed games

You simply implement the repeatable strategy at your highest efficiency, monitor it, and compound it for life