HowToLambo: Your Guide to Trading Success

In our last post, we discovered how expectancy works like a compass — giving us direction and helping us see the road ahead of our trading account. But a compass alone won’t move you forward. To actually get anywhere, you need an engine. And that engine is risk management. Many traders spend years looking for the “perfect” trading system, only to ruin it by stepping too hard on the gas. They don’t blow up because their strategy was flawed — they blow up because their risk was. Risk per Trade: The Accelerator and the Brake Think of risk per trade as the pressure you put on the accelerator. Risk too little, and your system barely moves. Risk too much, and you spin out of control. When you risk a fixed fraction of your account, every trade slightly changes the size of the next one. This creates compounding — the same principle that builds fortunes when handled with care, but wipes accounts when abused. The key takeaway is simple: risk is the throttle of your system. Push it wisely. Drawdo...

There are many possible journeys for your account — some lucky, some painful. But why is it that only one of them really matters? Let’s find out. 1. A Glimpse Into the Future (With All Its Paths) How confident would you feel if your trading plan could show you not just the average outcome you can expect, but also the good, the bad, and even the ugly roads your account might take? In this blog, we’ve talked about expected value as the trader’s true laser vision : the ability to project the evolution of your account instead of obsessing over the price of a single trade. Today, we’ll turn that laser forward in time. We’ll see how expectancy becomes real when trades start piling up, and how a couple of simple simulations let us peek into the different futures of a trading system. 2. The Power of Repetition: When the Average Becomes Real A single trade tells you nothing. It may end in profit, it may end in loss — but in statistical terms, it’s just noise. Things change once you start repeat...

In my past posts, we’ve explored a different way of looking at trading — one that’s less about “being right” on every trade and more about seeing the bigger picture. We talked about expected value as the trader’s true “laser vision” — the ability to project the future of your account rather than the price of a single asset. We also saw how looking at results in blocks, rather than one trade at a time, helps remove the emotional weight that comes from obsessing over each outcome. Now, we’re ready to take this one step further. It’s one thing to calculate an average from past trades — it’s another to use that number to imagine and measure the possible futures of your system. This is where probability and a few simple tools can turn a set of trading rules into a system you can test, stress, and trust. Over the next two posts, we’ll keep things intuitive, but we’ll open the toolbox a bit wider: First, we’ll talk about expectancy in action: how the average result grows more reliable ove...