http://www.forexspirit.com/2008/10/01/scalping-in-lion-country/ Colin McGinley's journey of forex trading by a thousand cuts Tue, 24 Jan 2012 06:42:32 +0000 hourly 1 http://wordpress.org/?v= http://www.forexspirit.com/2008/10/01/scalping-in-lion-country/comment-page-1/#comment-990 MarcoA Thu, 02 Oct 2008 18:09:32 +0000 http://www.forexspirit.com/?p=305#comment-990 Hi Colin, I usually think of this as 'controlling your losses' rather than 'cutting'. There are two factors that could be 'cut' in controlling loss; the average loss OR its frequency. Whether one uses the typical risk management of many small losses (cut in size) or the inverted version of a few (cut in frequency) large losses, if the percentage equity at risk is kept constant, there is no reason for one to be more dangerous than the other. Each of course will have a different max drawdown profile. I prefer to use the former approach, but appreciate seeing how others have made the latter work. Hi Colin,
I usually think of this as ‘controlling your losses’ rather than ‘cutting’.
There are two factors that could be ‘cut’ in controlling loss; the average loss OR its frequency.
Whether one uses the typical risk management of many small losses (cut in size) or the inverted version of a few (cut in frequency) large losses, if the percentage equity at risk is kept constant, there is no reason for one to be more dangerous than the other. Each of course will have a different max drawdown profile. I prefer to use the former approach, but appreciate seeing how others have made the latter work.

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