The Optimum Maximum Numbers
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Only three to five trades will have a reward-to-risk ratio of 2.5 or
greater. Using three trades as the more conservative number, we
can derive the optimum maximum number of trades per day, week,
month, and year. Each trading vehicle should give you three highprobability
trades a day; therefore, the maximum number of trades
would be three trades times the number of real-time security windows
(three), which would equal nine. If you are a day trader, by
definition you must be in a cash position at the end of the day. In
this example, for you the maximum number of trades would be 18,
reflecting the buy and the sell. If you are a day trader and you are
exceeding 18 trades a day, in all probability you are gambling, not
trading. The most profitable short-term traders make no more than
three to nine entry trades a day. The optimum maximum number of
trades is nine. The optimum number of trading vehicles you can
monitor successfully at any one time is limited by a human's ability
to concentrate and physically react. Time-and-motion studies show
that for the majority of people, following more than three positions
in real time is nearly impossible.
Only three to five trades will have a reward-to-risk ratio of 2.5 or
greater. Using three trades as the more conservative number, we
can derive the optimum maximum number of trades per day, week,
month, and year. Each trading vehicle should give you three highprobability
trades a day; therefore, the maximum number of trades
would be three trades times the number of real-time security windows
(three), which would equal nine. If you are a day trader, by
definition you must be in a cash position at the end of the day. In
this example, for you the maximum number of trades would be 18,
reflecting the buy and the sell. If you are a day trader and you are
exceeding 18 trades a day, in all probability you are gambling, not
trading. The most profitable short-term traders make no more than
three to nine entry trades a day. The optimum maximum number of
trades is nine. The optimum number of trading vehicles you can
monitor successfully at any one time is limited by a human's ability
to concentrate and physically react. Time-and-motion studies show
that for the majority of people, following more than three positions
in real time is nearly impossible.