Category: Tips / Psychology / General

I first touched on this concept of R in this post where I gave a simple exercise to hopefully help traders out there to stick to their trading strategies. I realised then that this defining of risk and profits in terms of R might come up in some future posts again, and so decided to write this post on it to explain it a bit better. Let’s start.

Let’s say that you have been trading for a while. Let’s say that  your results have been less than stellar and that this is because of problems that show up when you are trading. These problems could be a combination of any of the ones that I’m going to list below.

To make money in combination with freedom to work from anywhere, being your own boss  and being able to do anything that you want, when you want is some of the main reasons why people get into the trading game; at least initially. But in this post I want to point out some other benefits (non monetary) that trading offers, that can actually improve you as a person. That’s if you stick to trading long enough. Sometimes it happens without you even realising it.

For those traders that are just starting out, you are probably already on the quest to find the holy grail of trading strategies. And for those traders that have been trading for a while and are sticking to / trying to stick to their trading strategy realized that there is no holy grail trading strategy. As many traders are struggling to stick to their trading strategy, I will try by using simple examples from businesses to explain why it’s important to stick to your trading strategy and why it makes sense to do so. Let’s start.

In today’s post I will explore Profit / Loss Ratio, Win / Loss Ratio, Win – Rate and Risk / Reward Ratio, and how they could aid you in your trading.

When I started getting interested in mindfulness a couple of years ago, I did my fair share of reading up on it; and in doing so I came across the RAIN method: a method that I feel might be of use to some traders. The RAIN method is what this post is about.

If you trade long enough, you will notice ego being talked about a lot, whether it’s through trading blogs, podcasts, videos or books; ego will pop up. You might even start to ponder if your ego (we all have egos) poses a problem to your trading and so you might try to find out more on it like I did. Ego and trading is what I’m going to write about in today’s post.

There are some nuisances that come with trading that might make your trading journey hard, and it might be better to accept rather than trying to fight it. If you can’t accept the fact that anything can happen in a market for instance, I do believe that you’ll find your journey in trading might come with some struggles – that’s more so than the other traders who do accept it – and the sooner you accept it, the easier you might make said journey. 

I went short USDCAD sometime during February 2020 for various reasons (the specific dates and reasons are not important for this post) and was stopped out towards the end of that same month for a small loss. 

When I started getting interested in trading, (how I got interested is another story) a friend of a friend (who was more into investing than trading) advised me to start by reading the financial portion of the newspaper daily as well as trading books before I started this endeavour of trading just to be sure it’s something I truly wanted to pursue. He also did not hide the fact that trading was very difficult which I guess was sort of a blessing. That’s why I decided to read as many trading books (mostly technical analysis) as possible and also this one weekly financial magazine for close to a year before I started to trade. But during that same period I also started reading blogs / spent time online for systems to trade and that’s where I started seeing these courses / training and systems offering huge monthly returns. And so I started to believe that there is really big money to be made in trading. I remember making these rough calculations in my head like doubling my money every x months and taking out something every month (to live it up!) while still growing the account exponentially and so on.