TRADING EDUCATION
THE BASICS
14 April 2024
By Chris / Stockmoney Lizards
THE MINDSET
Imagine you had a magic dice with
4 red and 2 green sides.
You always bet on red.
THE MINDSET
Imagine you had a magic dice with
4 red and 2 green sides.
You always bet on red.
After you had 4 x red in a row: What
would be the probability that the
5th shows red?
Would you bet everything on red?
THE MINDSET
• No emotions
• Develop and test a system
• Stick to your rule-based
system
• ALWAYS DO THE SAME THING
• ALWAYS DO THE SAME THING
WHAT YOU THINK
TRADING WILL BE LIKE
WHAT YOU THINK WHAT IT SHOULD
TRADING WILL BE LIKE BE LIKE
What is the right system for me
TRADING SYSTEMS TIMEFRAMES
[Link] Following? 1 min
[Link] Reversion? 5 min
[Link] Trading? 15 min
[Link] Trading? 1h
[Link]? 4h
1 day
1 week
Why do I need a system?
Portfolio growth according to "Strategy"
140%
120%
100%
80%
60%
40%
20%
0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Impulsive Strategy
Why do I need a system?
Portfolio growth according to "Strategy"
140%
120%
100%
80%
60%
40%
20%
0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Impulsive Strategy
What is the right system for me
TRADING SYSTEMS TIMEFRAMES
[Link] Following 1 min
Please don‘t
[Link] Reversion 5 min
[Link] Trading 15 min Scalping
[Link] Trading 1h
The „sweet spot“
[Link] 4h
1 day Swing / Investor
1 week
The System – Example No. 1
The System – Example No. 2
D
The System – Example No.
X 2
D
The System – Example No.
X 2
Ground rules
[Link] Your Position Size: Determine the size of your trade based on your risk
tolerance and the distance to your stop-loss level. This ensures that you don't
overexpose yourself to losses.
[Link] 1-2% of Your Portfolio: Limit the amount of capital you risk on each trade to 1-2% of
your total portfolio. This helps preserve your capital and reduces the impact of individual
losses on your overall portfolio.
[Link] Risk the Same Amount: Maintain consistency in your risk management by risking
the same amount of capital on each trade. This prevents overtrading or undertrading
based on emotions or market conditions.
[Link] Your System: Know the Win Rate: Understand the performance of your trading
system, including its historical win rate and average risk-reward ratio. This allows you to
assess the probability of success for each trade and adjust your risk accordingly.
[Link] a Trading Diary: Maintain a detailed record of your trades, including entry and exit
points, reasons for the trade, and outcomes. This helps you identify patterns, analyze
your performance, and learn from both successes and failures.
Ground rules
[Link] Your Position Size
Total Risk per Unit = 69572 – 68880 = $692
Number of Units = 50 / 692 = 0.07225 BTC
Value of units = 0.07225 x Entry price = $5026
Ground rules
[Link] 1-2% of Your Portfolio
i.e. the amount you lose when
trade goes wrong. It does NOT
mean that this amount is what
you put in the trade.
E.g. 1% risk of $1000 = $10
Ground rules
[Link] Risk the Same Amount
This is the only way you can
constantly grow your account
[Link] your win rate
As you can see on the right, a 50%
win rate is enough if your RR-ratio
is 2:1
Ground rules
[Link] a Trading Diary
Keep track, learn and improve
Self-control
Use a spreadsheet
