I don’t know if there is any such thing as a fool-proof day-trading strategy, but if there is one, I imagine that it doesn’t make much money, or that it requires enormous resources and/or connections to inside information that are not accessible to the average investor.

Our purpose is to provide strategies that do not require deep knowledge, vast experience, expensive software, or exotic and complicated investment instruments, and which minimize the high risk that is always involved in day trading.  Our goal is to provide an effective strategy with sufficient risk control to be mastered successfully by the average frequent-trader with the minimum $25,000 account required by SEC regulations for day trading, and for whom a day trading strategy and its attending risks is appropriate.

The more complex a trading system gets, the more risk it involves, even if the extra layers are there ostensibly in order to reduce risk. This is because every extra layer of complexity introduces another opportunity for error, and sometimes many such opportunities. Whether it is a keystroke error or an error in analysis or an error in judgment, or an error in timing, every opportunity to make an error necessarily decreases your odds of success.
 
Hedging, for example, involves a bet in the opposite direction of your main trade, usually using the leverage of an option. Hedging can be a good idea because if you get it right, then your risk of a severe loss on the combination is minimal to none, and that is generally worth sacrificing a bit of profit. It reduces your possible profit because if your main trade is correct and makes money, then you will generally lose your investment in the option. The option is considered the “premium” on the health insurance policy – you do not intend to get your premium back, and in fact, you hope to get no payback at all on your policy by staying healthy. The risks in hedging are a little more severe, however. First, you need to get two trades right instead of just one, which is half as likely! If you get the primary trade right and you don’t get the hedge right, you could lose more than you need to lose on the hedge and if you get the primary trade wrong and you don’t get the hedge right, you could lose on both trades! Hedging also means taking extra time to select and to place an extra trade, and this time is often not available in a strategy involving frequent trading.
 
For simplicity and speed, and to reduce opportunities for error, most of our trades are un-hedged.
 
So, without hedging, how do we control for risk?  Join Now to read copmplete set of rules!