≈ A simplistic approach to Position Sizing. ≈
Position Sizing (a.k.a. Money Management) is one of the most important skills—if not THE most important—any trader should master in order to become a full-fledged PRO. It should be the first thing taught to anyone who wants to approach the financial markets for the first time.
Here at Tackle, this topic is so important that in the System Development 101 training series, the position sizing calculations is the first thing we teach our students how to perform when running the numbers to see if they are going to trade a certain asset or not.
There is no rocket science behind the Position Sizing theory. In fact, it is so simple that you will probably be offended by its simplicity and want to walk away immediately. The entire theory is solely based on two principles. We can still play with words, do some mind-stretching exercises, invent rhetorical games, develop some integrals and win the next Nobel Prize, but we are still going to find only two principles at the end of the rainbow:
Principle #1: You don’t know the future.
Principle #2: You can claim you know the future, but you can still be wrong about the outcome of the event, both in its nature and impact.
Two pillars, two cornerstones, two intrinsic, inseparable and absolute principles at its very core.
We are dedicating the March edition of the Trading Justice newsletter to this topic and nothing else. In the next couple of days, you will receive the “Holy Trinity of Trading Part II: Position Sizing” (gorgeously designed) PDF in your inbox for free.
SIGN UP HERE if you want to begin mastering the Art of Money Management.
Chart of the Day
Position Sizing Infographic
This infographic took from the System Development 101 training series, represents a reverse engineering process: traders will start to qualify their trades from the point where everything goes terribly wrong, i.e. from the point where the position will move against them and they will lose money.
Video of the day
What is Position Trading
Position Trading refers to a long-term type of trading, either speculative or based on fundamentals, that a trader holds from weeks to months.
Today’s line up
Traders Lounge 11PM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show 8:30PM EST
This is our weekly MasterMind group. Join the coaches tonight, 8:30pm EST to discuss the markets and help you prepare for the week.
Halftime Report 12:30PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
The Market Recap is designed to give you a quick overview of the day that was. While brief, this report is designed to cover all of the major events that drove the markets that day and help you plan for the trading day ahead.