Magical letters: RR

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10000+ systems and 10000+ ways how to be profitable – that’s the common saying. Yet only 10% of traders are consistent and profitable (still haven’t seen reasonable sample statistics that would prove this but let’s go with that). We all know why is that – another saying CUT your LOSES quick and LET the PROFITS run. That 90% is doing exact opposite – cutting profits soon and letting their losers run. Again we all know why – as Jesse Livermore once said: trader’s greatest enemy is himself.

After trading markets for several years with real money on the trading table every day I have learnt a few things. I no more believe in a success rate of the strategy (as I was sure it is the most important factor at the beginning of my journey). I always say, if you have a strategy with an edge think of it as 51% vs 49%. That 2% is your edge, the rest goes AGAINST YOU. You can flip the coin 10times and it is possible to get the head 10 times with 50/50. What I really believe in is simply sound RR!!! Full stop, exclamation mark! There is simply nothing more important than reasonable RR. With reasonable RR (greater than 2), risking no more than 1% (0.25% per C trade, 0.5% per B and 1% per A trades) of your account, patience and the saying mentioned above you can stay consistent and become profitable. Otherwise, the market will show you where are the exit doors of this club.

As of many traders out there I trade only supports & resistances – I simply believe that they are the FUNDAMENTAL core of human psychology in markets and for that reason respected. I do not use any fancy indicators for my entries or exits. During my trading sessions I am watching all timeframes but I focus and execute primarily on M1’s and M5’s. I am aware of previous S/R zones but I am much more interested in something I call “intraday technicity”. Because I trade the intraday flows I believe that trade orders are accumulating around certain levels which form during the day and the further in time we are from old S/R levels the less these old levels works. In the end all S/R levels are going to be broken and I am most interestd in what is happening right now – I am most interested in the “intraday technicity”. Where are those SCARY zones for BULLS and BEARS, where other side has to cover. By intraday technicity I simply mean the level which is respected during the day almost to the pip many times (at least 3 times). Second thing I care about is how is price reacting around this technical level. We can have many different reactions but not every reaction has the same meaning. So the second thing I am interested in is “type of reaction/type of respect”.   Third important thing I believe in is accumulation aka “ACU”. Something what is happening just before the level is broken and what is giving me the best RR (usually between 3 – 5 R).

So the corner stones of my core strategy are:

  • intraday technicity
  • reaction type/respect
  • acu

In the upcoming weeks I would like to cover these three aspects more deeply while I am upgrading my personal playbook. So if you want to find out more how to collect 3 and more R’s in one single trade watch my blog for updates.

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