As the saying goes, there are many ways to skin a cat. There are equally many ways to make money from trading. Since there is no correct universal answer, then who are we to judge how others trade?

Sure, you have the axioms of sound trading to guide you: cut your losses, let your profits run. It can only help you to follow those principles.

Victor Niederhoffer is a hero amongst some, a villain amongst others. His life in trading resembles that of a “person selling flooding insurance in New Orleans, and gets away with it for 50 years, until one day the levies burst”.

At WhichWayToday we use large stops, on the surface. We place a trade in the FTSE 100 today with a 120 points stop. Some would say, and some do, the stop is way too large. And it is. But it works for us, and it works like this:

We place a trade with a very large stop. We assume right from the get-go that the position is going to be a loser, until proven otherwise. It works for us. Phantom of the Pit taught us that. We work hard on immediately trying to reduce our risk down to a much smaller monetary amount.

And unlike Victor Niederhoffer we are not trading so big that the markets conspire against us, yet.

So when you come to our site and you see that we risk 120 points to make 20, you may think: amateurs. And maybe you are right. Or maybe you are just thinking like everyone else.

If I can make 20 points 90% of the time, and lose 120 points 10% of the time, I have a winning strategy.

If I can win 20 points 80% of time, lose 120 points 10% of the time and breakeven 10% of the time, I have a winning strategy.

Is this for everyone? Only you can answer that.

Last year we had a decent year, if you call doubling your account a decent year. This year we are starting in the right direction. Our model portfolio is up 5%. In 3 weeks. Our goal is to make 3-4% each a month. There are 2 traders in WhichWayToday, and although we sometimes take positions that are in conflict with each other, we tend to see the market the same way.

Morale of the story: whether I flip a coin, contact Mystic Meg, or use my secret FiboQuadrant indicator, I am bound to draw criticism from some and applause from others. That is the nature of the game.

For me, though, there is only one thing that counts: will I be profitable over the long-run? I will have to wait for the long-run to come around before I can answer that, but 12 months into WhichWayToday and 49 winning weeks later, I think it is fair to say that we are not in the 90% category, which crash and burn in the first 6 months. So raise a glass to large stops, and lets others do what they want to do.