Position Sizing

People are always looking for the "real" secrets of trading success, but their mental biases always have them looking in the wrong places and at the wrong things. Consequently, they search for magical trading systems with 75% accuracy or better or for great entry systems that they think will help them pick the right stock. Picking the right stock has nothing to do with success and neither does the accuracy of your stock picking.

Practically all Market Wizards agree that the key ingredients to your success are:

(1) the golden rule of trading—"cut your losses short and let your profits run;"

(2) that part of your trading system that tells you how much; and,

(3) the discipline to do both.

When you think about the golden rule of trading, it basically describes exits—how you abort losses and ride winners. When you think about Position Sizing™, it basically controls how much you risk on any given trade.

Dr. Tharp designed the "Secrets of the Masters™" Trading Game to help you learn the secrets to trading success before you trade the markets. This game totally de-emphasizes entry or "stock picking" and instead requires that you focus on the most important aspects of trading—Position Sizing™ and letting your profits run. Our new game has ten levels that get progressively more difficult to master. However, once you’ve mastered these principles, you’ll know you’ve mastered some of the key skills to trading success.

Download the game to your computer by clicking on the link above. You will have the opportunity to play levels one through three of the game for FREE.

If you choose to purchase the Secrets of the Masters™" Trading Game, which includes unlimited access to levels 4-10, all you'll have to do is order on line or call IITM at 1-800-385-4486. The entire game is $195. Once you order the game we will give you a personal access code that will allow you to play all levels of the Secrets of the Masters™" Trading Game.

"I have found the game to very helpful, and I’ve played it over and over again with different money management programs. It’s one thing to read about the mind traps that traders create regarding probabilities and the gambler’s fallacy, or to read that random number series can contain protracted winning and losing streaks, but playing a simulation that feels like trading really drives home the lessons about disciple, systems, and expectancy. Playing the game over time helps reinforce the idea that you get the same probability distributions as everyone else, and that your trading plan will need to address this fact through money management, position sizing, trading rules etc.

"I have found that it also helps you change the way you frame the activity of trading, because the game focuses on systems results and strips away entries, setups and the other false control illusions that traders inevitably get wrapped up in. At first it didn’t feel like trading, because it didn’t focus on the things that I did when I traded, but gradually it

"It dawned on me that I might not be focusing on the right areas. The opportunity to view a trading system as the random distribution of hundreds or thousands of independent trials changed my view about my ability to "change the markets", and focusing on maximizing system outcomes has given me a fresh perspective on trading, systems development, and risk." —Alan Stevens, Boulder CO

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