Free Info – The Power of Small Numbers: Trading Success is Based on Consistency, Not Home Runs

Futures Trading Systems HeaderFutures Trading Systems Spacer

Futures Trading Systems

The Power of Small Numbers: Trading Success is Based on Consistency, Not Home Runs



Free eBook

Free Articles


Free Offer

Futures Trading Systems SpacerOnline trading is so seductive – just sit, click, and rake in the profits! But as anyone who has ever seriously attempted online trading will probably tell you, it’s just not as easy as it sounds.

Many beginning traders are seduced by the lure of the “home run”, that big trade that makes you an instant millionaire and retires you overnight to your own private island paradise.

But then they wake up.

To really succeed at trading of any type, you need consistency, even if it’s with small amounts. The ultimate goal is to keep trading over and over to eventual riches, but by always going for the big wins they usually wind up with big losses instead.

It’s perfectly understandable for people to not be interested in small profits. After all, which would you rather have, big profits or small? But the fact is it’s not such a simple choice. Small profits are more frequently achieved but when traders refuse to take them, they often lose much, much more.

Small but steady gains over time can add up to some truly massive numbers. For example, in options trading (my main area of focus for the last few years) it is not at all uncommon to hear about profits of 100%, 300%, even 1000% in a single trade! And while these results are absolutely possible, by expecting them to be our every day results we train our mind to accept nothing less, and eventually doom ourselves to disappointment.

Imagine training yourself to take 10% profits. And what if you also train yourself never to put too much of your money into one trade, but instead to manage it carefully? Say you put only 10% or less of your total trading account into any one trade? If you could make just a 5% profit on only half of your total account every month, compounding the profits monthly, you would have a better than 31% return in 1 year’s time and over 115% in just 3 years! How many investments are you currently involved in that have returns like that?!

The key is small numbers, not large ones.

In trading, there are typically only 4 possible outcomes:
1. A large gain
2. A small gain
3. A large loss
4. A small loss

Assume that over time, your small gains and small losses will average each other out. That leaves you with only large gains and large losses. If you absolutely, positively never allow yourself to take a large loss, that leaves only the large gain. These large gains will ensure that you make a lot of money over the long run. You aren’t specifically aiming for them, but we know statistically that as long as you can survive in the trading game long enough, you are bound to get some lucky “home runs” every now and then.

You can’t win if you’re not in the game, and the way to stay in the game is through proper money management, risk assessment, position sizing, etc. Without these components most new traders blow their accounts out and never return to the game.

Don’t be one of those traders.

There are fortunes to be made in online trading, but you must be able to stay in the game. It is said that “the best offense is a good defense” and nowhere is this more true than in trading. Controlling risk and managing your money will all but ensure your success. The last major obstacle is your own emotions, but that’s a subject for my next article, “Emotions: A Trader’s Worst Enemy”.

Jonathan van Clute is a full time investor, educator, speaker, and online options and sports arbitrage trader. In addition to his business activities, he is also a musician, video editor/animator, and one of the world’s greatest Segway Polo athletes. He can be reached via email at and is speaking at an upcoming teleseminar, visit for details.


Futures Trading Systems

The 10 Golden Rules of Trading
1 Introduction In this article we cover the few important rules that should never be broken in trading. If you can apply these rules consistently, and with discipline, you will be well on the way to being a profitable trader. The rules we…

Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.
You know the old joke: “How do you make a million in the stock market? Start with two million?” There is no way around it, risk and stock market fees are a part of trading that you can`t avoid. But, you can manage your risk. You can also manage…

The Stock Trading Plan
that discipline contributed more to their success than their trading philosophy itself. Remember that the key to any plan is how well it holds over time. 2. There is no “sure thing”, and there is no trading system that is 100% accurate. Your…

Forex Trade: Main Drawbacks of a Forex Trader
Why is it that very few traders succeed in the Forex tradingenvironment while the grand majority of traders fail to achievesuccess? Although there is no hard answer to this question,there are a few things that will put you one step ahead and…

The Easy Secrets To Determine Stock Market Position Sizing
When trading in the stock market, position sizing is where all the tools of money management come together. It’s perhaps the most important part of your stock market money management rules. Position sizing is simply deciding how much you are going…





SitemapLink to Us

© 2005 by The Smart People Company for Futures Trading Systems

‘3’) {data=data+’&cd=’+screen.colorDepth+’&rs=’+escape(screen.width+ ‘ x ‘+screen.height)+’&tz=’+ntz.getTimezoneOffset()+’&je=’+ navigator.javaEnabled()};i=new Image();i.src=nhp+’://’+’?v=1&s=26&acct=freetradinginfo’+data+’&tks=’+d.getTime(); //]]]]>]]>

Leave a Reply