Practice

INVSTMOMENTUM

Trading Practice · Companion to the 3-Level Course

Name that candle

A candle is a battle report between buyers and sellers. Identify it, then read why it matters. (Level 1, Module 2)

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Chart replay — decide before you see the outcome

The chart draws bar by bar, then pauses at a decision point. Buy, wait, or avoid — exactly like real trading: no hindsight. (Level 2, Modules 1 & 4)

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Decision point — what do you do?

Position size & R:R

The 1% rule: never risk more than 1% of your account on one trade. Enter a trade plan — the calculator sizes it and grades the R:R. (Level 1, Module 4)

Account size ($)

Risk per trade (%)

Entry price ($)

Stop loss ($)

Target price ($)

Risk per share—

Max $ at risk—

Position size—

Position value—

Reward : Risk—

Opportunity cost — many small wins beat one home run

Compounding several modest gains beats hunting one monster trade. Adjust the numbers and watch the math (gains reinvested each time):

Gain per trade (%)

Number of trades

1 trade × 75%+75%

4 trades × 20%+107%

8 trades × 10%+114%

Your combo—

Eight repeatable +10% trades compound to +114% — more than a single +75% unicorn. Repeatable small edges are the only game in town. Stop hunting lottery tickets; build a process you can run again and again.

The power of compounding

Invest once, then let the rate do the work. Small differences in return are NOT small differences in outcome — they’re the only thing that matters. (From the INVSTMOMENTUM Substack: “The Power of Compounding.”)

Starting capital ($)

Years

Monthly return (%)

@ 0.5%/mo (T-bills tier)—

@ 1.0%/mo (index tier)—

@ 1.5%/mo (factor edge)—

@ 2.0%/mo (systematic)—

Your rate—

The trap: for the first 5–8 years the curves look almost identical, and most people quit before the hockey stick. The difference between 1%/mo and 2%/mo isn’t double the money over 20 years — it’s nearly 10× the money. Protect the rate (avoid big drawdowns) and protect the time (don’t quit in year 4).

Why this matters

With 2:1 R:R you can be wrong 60% of the time and still make money. Trading is not about being right — it’s about making more when right than you lose when wrong. Position sizing is what keeps a losing streak survivable: at 1% risk, 20 straight losses still leaves ~80% of your account.