The Difference Between +30% and +500%? These 4 Trading Principles
Outsized performance isn’t driven by trade selection alone—it comes down to these four principles, which have a far greater impact on your results than simply being right on a few trades.
Two traders can run the exact same ideas over a full year and still end up with drastically different outcomes—anywhere from +30% to +500% on the same set of trades.
The gap comes down to
1. Execution Quality — the same idea traded to the same exit price can be a 3R vs 10R difference on the same 1R loss. You multiply that by one full year of trade execution. Optimal entry is very important to me, and if you’re subscribed, you’ll know how strict I am about what qualifies as an actionable setup. I am very sure this is the biggest takeaway from the community how entry quality can define your performance in just under 2 weeks (avoiding stop losses specifically).
2. Dynamic Risk as a % of Equity — which drives position sizing and it has to be anchored dynamically to your streak. you can't possibly be trading the same % risk when you are on a downswing, and running the same % risk when market has rewarded your diligence and situational awareness),
3. Capital efficiency — and the ability to compound within a single idea enhanced through leveraged ETFs versus outright stock exposure ( 3x ETF has positive compounding that give you more than 3x return at 33% of the capital required when trend eg.
$iShares Semiconductor ETF(SOXX)$ +54% vs $Direxion Daily Semiconductors Bull 3x Shares(SOXL)$ +211% in 42 days)
4. Sell rules — minimizing loss size when wrong ((a stop loss should not be fixated to -1R. It can be done much less than that eg. -0.67R per loss) while maximizing gains when right (are you willing to part some shares to sell at strength on your most eutrophic winner that makes u feel great that day? how controlled are your unrealized profit loss per trade to your final exit?)
Don’t keep repeating the same approach if it isn’t producing the results you want. Use the four rules above as a framework, backtest them against your trading data over the past few years, and review the outcome. You may gain clarity on the direction you need to take next.
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Well done