Medinah, 2012. The US team took a confident lead into Saturday afternoon, and the Ryder Cup was sure to return to American soil. The air at ageless Medinah Country Club, just outside of Chicago, was filled with excitement and patriotism.
Less than 24 hours later, Sergio Garcia, Rory McIlroy and Graeme McDowell would be dancing on the 18th green while the European throngs sang ‘ole ole ole ole oooooooleeeeee, oooooole!’. The ‘Meltdown at Medinah’ was complete, the US had caved, and a historic comeback had been completed.
In any given market, anticipating price continuations, or sharp reversals, is a source of never-ending heartbreak for millions of traders. Fortunately, imbalances help hold the key to understanding who will prevail.
Turn One, the Indy 500. Your 16-foot long Indycar with a turbocharged, 3.4-liter Honda engine with around 700 hp has you humming along at 225 mph. That’s 330 feet, or just more than the length of a football field – every second.
Sure the brakes are important and so is the gas. But it’s the tachometer that tells you when to shift, based on an engine’s revolutions or speed. Without it, you can’t properly accelerate, or decelerate going into turns — which is death in a race.
There are 2 ratios that dominate professional traders’ thinking:
Notice that I intentionally worded each bullet point above with the words “of their trades.” It may seem practical and objective to back test a trading system to determine these ratios, but what’s more realistic is to trade a method yourself over a significant, statistically significant number of trades, record your actual real-world results, and use these numbers as your own win/loss and risk/reward ratios.
To get started, let me start with a simple definition of what “rules-based” or “systematic” investing is:
Rules Based Investing is the process where ALL investment decisions are made via “pre-established rules” that clearly define the what, when, and why for buying and selling an investment.
It's an approach to investing that relies on “observable” and “verifiable” evidence between the data used to make decisions and the desired outcome.
You need to understand WHY this is so important for growing your wealth.
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. TopShelfTraders.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. By registering for this event your information may be shared with our educational partners. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of TopShelfTraders.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.