a chat today reminded me that the crucial first step in any successful trader’s journey is to… stop doing really dumb shit.

if you have no edge (and i think we can both assume you won’t at the start) then there’s nowhere for returns to come from. you can’t make money like that but there are plenty of ways you can lose money.

1) if you have no edge then every trading approach apart from doing nothing can be expected to lose money. trading costs money (from fees, spread, and the price impact of your own trades.)

2) the bigger you size your positions, the more likely it is that you will experience negative returns bigger than your account equity and realize a total loss.

3) your expectation will be negative if you take any no-edge volatile position because returns are volatile. if it goes down 50% you need to make 100% returns to break even. (logs innit?) the more you size up, the bigger this "drag".

so, if you like losing money: - make a lot of trades - size really big.

if you actually like money: - don't do any of that stuff.

it's a helluva lot easier to lose money than make money. but it's actually quite hard to lose a lot of money quickly if you avoid doing really dumb stuff.

if you avoid: - trading too often - trading too big - trading illiquid costly stuff then you’ll get far better odds (well, less bad odds) than the roulette enthusiast. and that’s a good place to start. beep...boop

read more of the stuff i write here: or don't. i'm not your dad. probably.