• Admin

The Rules to Guide You Deal with Market Uncertainty

Having an edge on the market is what separate winners and losers in the financial market. An edge is not a trading strategy but rules to guide you when dealing with market uncertainty.

Ever had of the saying "The House Always Wins"? This is said because the Casino's always have an edge against participants.Great example is the roulette wheel,the roulette wheel has 18 black numbers and 18 red numbers and 2 green numbers. Participants might think they have a 50/50 % chance of winning.What they don't realize is that in the long run they'll lose all the money they have to the Casinos. Example you bet on black, your probability of winning would be 47.3% (18/38) and the probability of the Casinos to win would be 52.7% (20/38). The Casinos edge is 5.4%. This means for every $1 bet the casino makes $0.054 (5.4%) for every $1M bet the casino makes $54000. This exactly the same thing within the financial markets but this time as participants we have to have an edge against the market.

Our edge would be determined by our Risk Management and position sizing. To have an edge against the market you would need a risk to rewad ratio of more than 1:1 which would be determined mined by your trading style. For example we trade trades with minimum risk:reward 1:3. This means for every $1 risked we make $3.An edge would be also determined by the accuracy of your system to predicting move of the markets. Say it is 40% accurate. Out of ten trades you'll win 4/10 and lose 6/10 trades.

This means overall for every $1bet you'll lose $6 (6/10) and win $12 ($3reward×4 trades) on(4/10).overall you'll have made a $6 profit even though your accuracy was low.This is what is called having an edge. We will then use position sizing to determine how much we risk per position which advisable would be 1%-3% of your trading so you may stay longer on the market and avoid drawdowns from draining your account. Thank you people have a good day and I wish you good luck on your mission to success.

4 views0 comments

A leading day trading platform, specializing in U.S. equity markets with operations worldwide.



Mon - Fri 9:00 - 17:30 HK

‭+852 55745397


RM06,13A/F, South Tower, World Finance Centre, 17 Canton Road, Tsim Sha Tsui, HK.

Options involve risk and are not suitable for all investors. All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed as investment advice. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit. Margin borrowing is only for experienced investors with high risk tolerance. You may lose more than your initial investment. Lower investment costs will increase your overall return on investment, but lower costs do not guarantee that your investment will be profitable. Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations. Past performance is not necessarily indicative of future results.

  • Facebook
  • LinkedIn
  • Twitter
  • Instagram
  • TikTok
  • YouTube