I like Elders method as well, I use it "most" of the time, except when support and/or resistance indicates a change. However, Elder does not address the individual who has far less money. So the answer for those working with $5,000 Canuck is different than those working with $20,000 "Merican"
the example you give is also based on a reasonable portfolio. What you are basically saying is you would be able to lose 40% on a trade, I would never buy with the knowledge that I was willing to lose 40% on a single trade.
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