Let's talk about the cliche of TOPS COLA
Thanks for coming!!
Be relaxing with a cup of coffee and chocolate!!
TOPS COLA (Take our profits slowly, and cut off losses at once)
In my opinion, the real TOPS COLA is...
Pursuing profit with taking a risk which you can admit but seldom happens.
Okay, I would like to explain.
TOPS COLA with Risk Reward Ratio.
It is said that higher risk reward is better.
This is the TOPS COLA, as I said.
In this video below, I performed an experiment of this theory.
I gradually augment the risk-reward.
Were the augmentation and profits are proportionate?
The answer is, no.
Here, you can learn a lesson that TOPS COLA is not a sacred cow.*1
TOPS COLA is just a dream
The smaller you take a risk, the lower return you take. That's natural.
If you want to make a high return, a decent amount of risk is needed.
If you want to take 100pips profit with the risk of only 15pips, the risk-reward ratio is 6.6.
Of course it's fantastic if it comes true. Yes, if it comes true.
The fact is not going so well.
What is more, the ratio will be 66 if you want to take 1000pips for the risk of 15pips.
Okay let's see...
In this simulation, the max drow down is 2200JPY, and at the same time, the gross profit is 700JPY.
Do you think it's fantastic, really??
Do you really think you can take 1000pips without any loss of 15pips??
Then, what you will do is not an investment, but a lottery.
Your bankroll is going to be smaller and smaller if you do that kind of trades.
"TOLS COPA" is needed if you want to make money
Then, what can you do to make money??
To this, make risk smallest and return largest simultaneously as you can.
However, that does not mean TOPS COLA.
In my opinion, risk is multiplication rather than addition.
Risk amount= Hazard× Chance of Hazard
That means you can lessen a risk in two dirrections.
Lessen the risk by taking risk only if you can take.
You need to analyze and understand the every situation which may happen.
At the same time, you should cope with all of them if it happens.
Unwanted action is 100% happen. Then we just treat.
If you are in trouble when it happens, then that risk is not for you to take.
As I said, unexpected should happen 100% since you determine to take for that.
When you set an s/l before thinking to enter, consider that you can be calm or not if the price will reach that s/l.
If you can't, we should not enter. That trade is not for you.
If you can, we should enter. You should execute the original s/l instantly if the price reaches.
There is no "if-then" scenario in trading.
After s/l is executed, and the price will reverse, take that for granted because there is a possibility you made further losses...
Lessen the risk by lessening the change of hazard.
The risk can be dismissed if the chance is close to zero.
An extreme example is, the chance of USD/JPY moving 10000pips in 1 minute is very low.
Some deny scalping, and that's reasonable.
This is because there are lots of chances that hazards will happen.
If you are holding positions for decades, another extreme example is here.
"Buy USD/JPY and hold until it descends 50000pips."
That should be profitable if the hazard won't happen.
If it happens, there is nothing you can do.
Do you manage this strategy?? I won't.
The real TOPS COLA is... what?
Let's say USD/JPY fluctuates just 15 pips for one minute.
If you want to take 30pips reverse, then it isn't easy.
That will be a suitable hazard of 30pips.
If the loss reaches, you just cut the position.
It is important that
we close our position as soon as possible,
when the market turned out to be an unexpected direction from our anticipation.
Also, it is necessary for us to
hold our position as long as we can,
when the market is going in the right direction, we assume.
This strategy means the actual TOPS COLA, in my opinion.
TOPS COLA is not the simple idea of pursuing the risk- reward ratio.
The TOPS COLA is
to gain profit by taking the risk.
That risk is
which seldom happens but which can cope with even if it happens.
The last message
It is far from easy to carry out, even if we know what we should do.
To aid this implementation, I would like to continue my YouTube channel.
This helps me to conduct right according to my strategy.
Also, I can modify my strategy by reviewing these videos.
If you would like, you can watch my trades from the link below.
Thank you for reading this article.
See you then!!
*1:Strategy which anytime make sense.