Page 29 - ART® Study Manual html5 - flash

® “Home-Study Course” Study Manual Page 29

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When traders ask themselves this question, they will either adjust their
“Trade Size” or tighten their stop-loss before entering the trade. In
most situations, the best method is to adjust your “Trade Size” and set

your stop-loss based on market dynamics as taught in the ART®
“Home-Study Course”.

During “Draw-Down” periods, risk control becomes important. Since
Master traders test their trading systems, they know the probabilities of
how many consecutive losses they may incur.

You’re Right 60% Of The Time

The idea behind money management is that, given enough time, even
the best trading systems will only be right about 60% of the time. That
means 40% of the time you will be wrong and have losing trades. For
every 10 trades, you will lose an average of 4 times.

Even trading systems or certain trading set-ups with advertised higher
rates of return nearing 80% usually fall back to a realistic 60% return
when actually traded.

So, if you are losing 40% of the time then you need to control risk. This
is done through implementing stops and controlling position size. You
never really know which trades will be profitable. As a result, you have

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