Yes. As a new trader, there are a couple of important things for you to make money trading.

First, you have to have a set of profitable rules. If you don’t have profitable rules, you won’t make money.

Second, once you’ve got a set of profitable rules, you have to have the confidence to keep following them. But, unfortunately, a couple of things can shake your confidence; either you don’t trust the rules, or you’re not comfortable with the level of fluctuation, volatility, risk in dollar terms, or don’t understand how the rules work and what’s happening. So, if you don’t trust the rules, you can build confidence by testing them on the historical data so you would know the circumstances of what would happen to the system when you perform it. So the rules are better than the rules changed, or you can optimize and improve them and make the rules even better so they make more money. Build confidence in the rules by testing.

As a trader, the confidence in the volatility of your account is all about your risk profile or your risk tolerance. You have to ask yourself how much money are you willing to risk to still sleep well at night and don’t get stressed out? On day one, that might be a small amount, and in six months or a year, it might be a much bigger amount, but this is what’s right for you. So there are two parts to it: there are the dollar fluctuations and the percentage fluctuations.

If your account drops suddenly to 30%, are you comfortable? What’s your risk tolerance? It all depends on you.

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