50% of our collisional encounter is risk management. It is objective, pre-defined, and non-emotional. "When we enter a room, the first thing we do is learn where the exits are". Combined with the buy and sell signals, Collision MethodologyÂ® is in a constant dynamic exchange of harmonious interaction.
By design, a high percentage of time the outcome of buy and sell signals produces an immediate momentum of price that is favorable. This can happen very soon after trade initiation and is a result of the pattern recognition methodology. Once a pre-defined level of positive price action is achieved, a protection is put into place to create at worst a break-even result. It is a continual system of money management that is defensive in nature and always limiting losses and not letting profitable trades turn into losing transactions. The placement of contingent orders, such as a â€œstop-lossâ€ or â€œstop limitâ€ order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.
To that end, a low percentage of the time the signal produces negative price action immediately and does not recover at all. In every trade signal that is produces, a worst case loss parameter is put into place at the outset to protect capital. Each and every signal goes in with a pre-defined maximum loss scenario.
The result is a pattern of trades with many break even trades, and a win ratio over losses of approximately 2 to 1. This combination of high probability buy and sell signals with a highly restrictive risk management discipline is the back bone of Collision MethodologyÂ®. By definition, a meeting of two disciplines or forces exerting a force upon the other.
The signals for trade opportunity come to Collision MethodologyÂ®. Nothing is fabricated or forced...it is not determined through emotion. It is objective and nonjudgmental. The trading decision is unveiled objectively and the core of Parkestone Capital Management is a balance of objectivity and discipline.