OrderFlowDashPro
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When I looked at the differences in trading compared to gambling, I found something striking. The biggest difference that differentaties trading from gambling is the ability to bet more in trading when the odds are in your favor. All the gambling games have betting limits, negative expectancy, or very powerful adverse selection (i.e when a player goes all in in No-Limit hold'em the other players will either fold or tend to call with an equal or better hand).
I feel that the novice trader probably doesn't understand just how powerful an edge the ability to vary the bet size is. First, you need to be able to have a feeling for when you've got a great trade or a trade that is not so good. While we often read about traders who can't tell the difference, a skilled trader's confidence should approximate the quality of the trade he or she has. I find reading the tape helps me with this aspect. Once you know you've a great trade, you can add size on your best trades or take size off on your weaker ideas. Variation within limits is the key as confidence is not assurance.
While confidence betting is important for any trader, one style of trading it works well with is what I call "point to point" trading which means I'll trade from any point to any other point. No waiting on setups- just get a quick idea and excute. The goal with point-2-point trading is to capture even average opportunity. The idea with point-2-point trading is to get into the market with small size and then by virtue of being in the game, you have the ability to add size when the good opportunity arises.
As you might realize, it is not possible to point-2-point trade futures with a small account. Though one might approximate this style by having two accounts open, a simulated account and a real account and taking the best opportunities in the real-account while staying in the game in simulated account--just need a solid system for keeping the accounts separate. At any rate, this style works best when one can get in with minimal leverage and ramp the leverage up by adding contracts at opportune times. I plan to try it in Forex soon and see if it works as well for me -- as the scaling opportunities are really much better there.
Now you might ask, why would you want to take average opportunities? Because the net profit, risk per trade, and profit factor form a type of relationship. A trader who only takes the best opportunities will only have a relatively few opportunities to profit from and thus must bet big to capitalize on those rare opportunities. While the trader may be aligned with the odds, the big trades will result in big wins or losses. As the trader shifts toward taking trades with less edge, he can reduce his risk and increase his net profit -- up until the point where the transaction costs negate the gains. So, it is possible to reduce risk by taking more medicore trades.
I feel that the novice trader probably doesn't understand just how powerful an edge the ability to vary the bet size is. First, you need to be able to have a feeling for when you've got a great trade or a trade that is not so good. While we often read about traders who can't tell the difference, a skilled trader's confidence should approximate the quality of the trade he or she has. I find reading the tape helps me with this aspect. Once you know you've a great trade, you can add size on your best trades or take size off on your weaker ideas. Variation within limits is the key as confidence is not assurance.
While confidence betting is important for any trader, one style of trading it works well with is what I call "point to point" trading which means I'll trade from any point to any other point. No waiting on setups- just get a quick idea and excute. The goal with point-2-point trading is to capture even average opportunity. The idea with point-2-point trading is to get into the market with small size and then by virtue of being in the game, you have the ability to add size when the good opportunity arises.
As you might realize, it is not possible to point-2-point trade futures with a small account. Though one might approximate this style by having two accounts open, a simulated account and a real account and taking the best opportunities in the real-account while staying in the game in simulated account--just need a solid system for keeping the accounts separate. At any rate, this style works best when one can get in with minimal leverage and ramp the leverage up by adding contracts at opportune times. I plan to try it in Forex soon and see if it works as well for me -- as the scaling opportunities are really much better there.
Now you might ask, why would you want to take average opportunities? Because the net profit, risk per trade, and profit factor form a type of relationship. A trader who only takes the best opportunities will only have a relatively few opportunities to profit from and thus must bet big to capitalize on those rare opportunities. While the trader may be aligned with the odds, the big trades will result in big wins or losses. As the trader shifts toward taking trades with less edge, he can reduce his risk and increase his net profit -- up until the point where the transaction costs negate the gains. So, it is possible to reduce risk by taking more medicore trades.
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