A couple of weeks ago we shared a podcast about Dynamic Position Sizing (DPS).
After that episode, we received an interesting comment from BTA podcast listener Paul (thanks Paul!), which we believe could bring more clarity to other traders as well.
Paul is a trend follower who’s been trading for about 2 years.
He’s figured out that varying his position sizing can be a good way to improve his results.
So, he started applying position sizing to his trading, betting more on trades he thinks have a higher chance of being profitable.
Sounds good right?
Well… it depends…
Even though Paul seems to have found a way to improve his results using position sizing, he could potentially be applying a very dangerous concept that is far from DPS.
Something that can bring traders a lot of pain and frustration.
What is it?
In this podcast episode we discuss Paul’s comments, plus a whole lot more, including:
- What is DPS and how to correctly use it in your trading to improve your profits,
- How this particular position sizing technique can ruin your capital very quickly,
- Why you shouldn’t remove a lower probability trade from your trading system,
- The tool you should be using to predict your most realistic worst-case scenario,
- And much more!
“We never break rules within the Dynamic Position Sizing. It's all very well researched statistically.” - Tomas Nesnidal Click To Tweet “Martingale position sizing is extremely dangerous. It's got nothing to do with professional, safe trading. It can really, really ruin your capital very quickly.” - Tomas Nesnidal Click To Tweet “More often than not, the market will prove to you that the back-test statistics have got nothing to do with the live trading.” - Tomas Nesnidal Click To Tweet
– If you’d like to learn more about the Breakout Strategies Masterclass, you can grab more info here.
Do you have any trading questions you’d like answered? Submit them here, and we may cover them in a future episode!
Episode 013: Listener question – “What’s the best software for executing and monitoring strategies?”