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The truth about prop firm trading – a must-read
Every trader will at some point come across information about proprietary firms and prop firm trading. While this is a great opportunity to scale up and take your trading to another level one has to be aware of a few things that in reality are not as they might seem at first look. Discovering how things work can help you pass the prop firm challenge and achieve long-term success as a funded trader. A closer look at prop firm trading account If you look at any prop firm’s website you’ll discover that they offer evaluations for different account sizes starting from 5000 USD and going up to 200,000 USD. The…
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Risk management in trading
There are hundreds of articles on risk management in trading on the internet that cover various aspects of it. I’m not going to repack the content that is available out there but focus on my view on risk in trading and my strategies for risk and exposure management. To begin with, let’s define what risk in trading actually is. For me the definition would be as follows: Risk is the probability of losing the capital. So, risk management involves working with probabilities and undertaking measures to reduce the probability of losing the capital. When considering risk in trading, we can speak of probabilities of losing the capital exposed during…
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System backtesting
Trading can be a complex and challenging endeavor, with all the variables and factors one has to consider when making trading decisions. Developing a system that can reliably generate profitable trades over time is the most crucial aspect of it. When working on a system, it is essential to engage in backtesting (testing a trading system using real market historical data) to evaluate its effectiveness and potential profitability. System backtesting is very important for various reasons. A day or two spent on backtesting can give preliminary knowledge of whether the system is profitable or not. It allows to check the effectiveness of a system without risking any real money. Backtesting…
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