Sairaph @sairaph - Twitter Profile

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about 1 year ago

Shower thoughts - I keep seeing these posts from traders that are consistently asserting that a person is 1 trade away from blowing up their account. Or 5. Or 12. That's sensational and all but are you trying to get impressions or are you trying to teach about risk management? Let's assume you had a $1,000 account and we want to know how many trades it would take to lose $900, if every trade hit your stop loss, with 1% account risk. 229. X = 1000 * (0.99)^n, where X is a value greater than 100 and where n is the number of trades. 1000 * (0.99)^229 = $100.11 1000 * (0.99)^230 = $99.10 If your account cannot withstand 229 stop losses in a fucking row, then you have far more problems than risk management. This would be proper risk management, however. So when people claim "You are 2 trades from blowing up your account!!%@5Ojpodipo34##$#$", dig into what they are really saying, which I interpret as this: 1. They want to prove to you they are right for attention without proving they are right. 2. They are not being clear in their messaging and are using terrible fucking examples. If you want to reduce a $1,000 account to $100 in X number of trades, here's how: 1 trade, 90% account risk, ignore all semblance of proper trading. Go gamble in a casino. 2 trades, 68.38% account risk, ignore all semblance of proper trading. Go gamble in a casino. 4 trades, 43.77% account risk. Are you a gambler or a trader yet? 10 trades, 20.57% account risk. Think you'll never have 10 losses in a row? 20 trades, 10.88% account risk. I think there's a clear threshold where if you have this many losing trades in a row, you've got a serious problem on your hands. If you did 2% account risk because you feel more confident in those trades: 1000 * (.98)^113 = $101.99 So even at 2% risk, you are still going to draw down your account 90% after 113 straight fucking losses. This is why risk management is so important, because you can draw down 90% of your account on 4 straight losing trades and that isn't even risking 50%! If you are new, this is far, far more likely to happen. And if you arrogantly believe you cannot lose 4 trades in a row, then go bet black at the roulette table and believe the same nonsense. I was not taught this. I read it but I was emotionally unprepared for the harsh realities of not only being wrong but losing a ton of money in the process. If you want to be successful, manage your goddamn risk. I'm not going to sell you a seminar, link you to one of my other social media sites, or my free .PDF full of pictures I made Grok poorly draw, or my Discord, Linked In, ICQ, AOL Instant Messenger, blah blah blah. Last but not least, I coded my risk management into a custom indicator in TradingView, see attached. This helps me quickly analyze my risk and the costs. Outsource your cognitive functions where possible so you can focus instead of doing quickmaffs or guessing. May the Schwartz be with you.

sairaph's tweet photo. Shower thoughts - I keep seeing these posts from traders that are consistently asserting that a person is 1 trade away from blowing up their account. Or 5. Or 12.

That's sensational and all but are you trying to get impressions or are you trying to teach about risk management?

Let's assume you had a $1,000 account and we want to know how many trades it would take to lose $900, if every trade hit your stop loss, with 1% account risk.

229.

X = 1000 * (0.99)^n, where X is a value greater than 100 and where n is the number of trades.

1000 * (0.99)^229 = $100.11
1000 * (0.99)^230 = $99.10

If your account cannot withstand 229 stop losses in a fucking row, then you have far more problems than risk management. This would be proper risk management, however.

So when people claim "You are 2 trades from blowing up your account!!%@5Ojpodipo34##$#$", dig into what they are really saying, which I interpret as this:

1. They want to prove to you they are right for attention without proving they are right.
2. They are not being clear in their messaging and are using terrible fucking examples.

If you want to reduce a $1,000 account to $100 in X number of trades, here's how:

1 trade, 90% account risk, ignore all semblance of proper trading. Go gamble in a casino.
2 trades, 68.38% account risk, ignore all semblance of proper trading. Go gamble in a casino.
4 trades, 43.77% account risk. Are you a gambler or a trader yet?
10 trades, 20.57% account risk. Think you'll never have 10 losses in a row?
20 trades, 10.88% account risk. I think there's a clear threshold where if you have this many losing trades in a row, you've got a serious problem on your hands.

If you did 2% account risk because you feel more confident in those trades:

1000 * (.98)^113 = $101.99

So even at 2% risk, you are still going to draw down your account 90% after 113 straight fucking losses.

This is why risk management is so important, because you can draw down 90% of your account on 4 straight losing trades and that isn't even risking 50%! If you are new, this is far, far more likely to happen.

And if you arrogantly believe you cannot lose 4 trades in a row, then go bet black at the roulette table and believe the same nonsense.

I was not taught this. I read it but I was emotionally unprepared for the harsh realities of not only being wrong but losing a ton of money in the process.

If you want to be successful, manage your goddamn risk. I'm not going to sell you a seminar, link you to one of my other social media sites, or my free .PDF full of pictures I made Grok poorly draw, or my Discord, Linked In, ICQ, AOL Instant Messenger, blah blah blah.

Last but not least, I coded my risk management into a custom indicator in TradingView, see attached. This helps me quickly analyze my risk and the costs. Outsource your cognitive functions where possible so you can focus instead of doing quickmaffs or guessing.

May the Schwartz be with you.

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Sairaph

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