Van Tharp The Secrets of the Masters Trading Game Position Sizing15文档.pdf

1 Introduction to Position Sizing™: The Secrets of the Masters Trading Game By Van K. Tharp, Ph.D. Background: People are always looking for the real secrets of trading success, but their mental biases always have them looking in the wrong places and at the wrong things. Consequently, they search for magical trading systems with 75% accuracy or better or for great entry systems that they think will help them pick the right stock. Picking the right stock has nothing to do with success and neither does the accuracy of your stock picking. You might be saying, How can you say that? Well, practically all Market Wizards agree that the key ingredients to your success are (1) the golden rule of trading - cut your losses short and let your profits run; (2) position sizing™ or that part of your trading system that tells you how much; and (3) the discipline to do both. When you think about the golden rule of trading, it basically describes exits - how you abort losses and ride winners. When you think about position sizing™, it basically controls how much you risk on any given trade. Ive designed Position Sizing™: The Secrets of the Masters Trading Game to help you learn the secrets to trading success before you play the markets. This game totally de-emphasizes entry or stock picking and instead requires that you focus on the most important aspects of trading - position sizing™ and letting your profits run. Our game has ten levels that get progressively more difficult to master. However, once youve mastered these principles, youll know youve mastered some of the key skills to trading success. To complete this game, you must master four key principles. These principles include (1) understanding the importance of R-multiples; (2) understanding the difference between expectancy and probability; (3) learning how