Trader Mindset

Why You Want to Trade Your Equity Curve


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Don't cauterize your winners. Let them run.

Position size your trades so that you can stay with them as long as possible. You can trade smaller if the vol is bothering you. Then backtest to see how the results would have played out.

You can blend two or more systems to smooth out your trading curve. Adjust your positions by conjugating them with the ATR.

Trade smaller with higher vol instruments and larger with lower vol instruments. Always risk the same amount per trade.

Make sure you are taking on enough risk to meet your financial goals.

You can haircut your equity when you are in a drawdown.

Trading using tiers for position sizes is amateurish as you inadvertently trade larger or smaller than what your optimal risk should be.

Optimal risk per trade can be calculated from backtesting.

Trade with consistent position sizing so that you are only risking the same percentage for each instrument.

One or two percent per trade is extremely aggressive in today's world. Think more along the lines of .1 to .2% per trade.

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Trader MindsetBy Michael Martin

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