HOW TO KNOW YOU HAVE AN EDGE OR WHETHER IT STILL WORKS?
Today I want to go over a simple method that can help you find out how to know if you have an edge or if it’s stopped working and how to review your trades correctly.
Knowing if your edge has stopped working or even know you even have an edge can be explained simply by just using a 20-trade sample size.
I first came across this method from the great Mark Douglas.
He stated that you should always review your trades in batches of 20.
This is because it’s just large enough to know if your system is working and just small enough not to destroy you if it’s not working as it should.
So if after 20 trades you are seeing abnormal results to what you have tested historically, you can then begin to work out whether it’s because of you, some missing component, or the strategy itself is just obsolete.
Trading In 20 Helps Think Probabilistically.
This is especially good for newer traders or when starting a new strategy because once you have your trading
Trading In 20 Helps Think Probabilistically.
This is especially good for newer traders or when starting a new strategy because once you have your trading plan ready to go aiming to consistently execute your system for 20 trades no matter what the outcome will help keep you focused on the process and not the outcome.
