When setting out in the Performance Coaches' Trading Combine®, the Coaches really wanted to exhibit good risk management techniques in a real-time market. Ultimately, the market does what it wants - and the Coaches can't guarantee that they would see it clearly. But they could guarantee that risk management would be paramount, and we hoped to show its impotance.
With today's trades, their closing balance is $49,958.09 - down just $41.91 for the challenge. At one point in the challenge, however, they were in a $1,359.70 drawdown and just $640.30 away from their max loss.
Here are the three things that kept them in their Trading Combine when the odds were not in their favor.
- Staying small and managing risk above all else. Even though the $50K Trading Combine allows traders to trade 5 lots at a time, the Performance Coaches only traded 1 lots - and rarely would have more than two trades on at a time. In addition, they were able to lose a maximum of $1,000 per day, but decided to cut themselves off after a loss of $500.
Together, these measures don't guarantee that they would meet the profit target - but instead guarantee that it will take a lot of bad days before they'd bust out.
- Adjusting their plan and rules. When you are in a drawdown, you can't just pretend that what you are doing is working. You have to change something. And what the Coaches did was make sure they didn't get near their max loss of $500 when they were about 50% of the way to the max drawdown.
You can see this in the average losing day, which is a loss of $235.16.
- Risk-to-reward ratio matters - a lot. If you had one metric to look at to tell if someone was successful in trading, it would be the risk-to-reward ratio. The Coaches lose an average of $119.93 on their losing trades and make an average of $232.15 on their winning trades. This allows them to be right on 34% of their trades and still not lose a lot of money.
If they get that winning trade percentage up to 50%, they'll go from breaking even to making an average of $280.55 a week. That's an extra $1,000 a month - not bad for part-time work.
If you want to follow the Coaches' trades on Twitter (@topsteptrader), you can use #CoachesCombine. Here's how we reported them today.
Total performance for the day, including fees and commissions: $262.64. Balance is $49,958.09. For more, check out their Trading Combine dashboard below.