How to improve my risk management for daytrading.

ironchef said:
Very helpful.

Question for you:

In options, when net long, I used premium paid as my stop, but when short, I had trouble deciding if and when I should stop loss and get the hell out. Do you have any thoughts?

Thank you in advance.
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When you're thinking about getting out, are you already delta hedging? To be clear are you;

- selling naked vol, no hedging, and to 'get the hell out' closing the option position
- selling naked vol, initially no heding; and asking at what point to begin delta hedging?
- selling vol, delta hedging, and to get the hell out closing the option position and the delta hedge

GAT
 
globalarbtrader said:
When you're thinking about getting out, are you already delta hedging? To be clear are you;

- selling naked vol, no hedging, and to 'get the hell out' closing the option position
- selling naked vol, initially no heding; and asking at what point to begin delta hedging?
- selling vol, delta hedging, and to get the hell out closing the option position and the delta hedge

GAT
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Only trade single legs, no combinations. I don't delta hedge. Often writing puts naked, calls covered.
 
ironchef said:
Only trade single legs, no combinations. I don't delta hedge. Often writing puts naked, calls covered.
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Same principle. Set a max $ loss then when the p&l of the package hits it, close the position. The exact price of the underlying that relates to will obviously change over time.

GAT
 
in daytrading you have limit loss and daytraders risk like $1000 that is it. and prices don't change much during trading hours.

it's over the weekend or overnight that 'news' can crash the price like 50% overnight for stocks that blows up accounts.
that is the reason daytraders don't hold overnight, they are traders and can open a position next day
daytraders penny cheap in commissions. way cheaper than retail commissions.

in futures,,it's max 5% the market will go up or down it's called limit down..it's not normal for prices to crash 5% in day. the exchange would put a lock limit on the instrument. stocks and penny stock,,there is no lock limit. it can drop 90% or 95% overnight. or increase 500% overnight..stocks are like options where as commodities index futures are more stable prices and don't change much on a daily basis.

a 5% change in stock is minimum,,but if the 'market' crashes 5% it's considered a 'catoshproe or 'CRASH'

Sekiyo said:
I think Investing is different than trading.
If you’re not leveraged you can ditch SL.
Just allocate x% and let it grows up.

Went into cryptocurrency long term.
Lost 50% up to a point. But a loss not taken isn’t a loss.

Day, swing, trading is different as you’re leveraged and can lose your entire account in the process.
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buttermarket said:
in daytrading you have limit loss and daytraders risk like $1000 that is it. and prices don't change much during trading hours.

it's over the weekend or overnight that 'news' can crash the price like 50% overnight for stocks that blows up accounts.
that is the reason daytraders don't hold overnight, they are traders and can open a position next day
daytraders penny cheap in commissions. way cheaper than retail commissions.

in futures,,it's max 5% the market will go up or down it's called limit down..it's not normal for prices to crash 5% in day. the exchange would put a lock limit on the instrument. stocks and penny stock,,there is no lock limit. it can drop 90% or 95% overnight. or increase 500% overnight..stocks are like options where as commodities index futures are more stable prices and don't change much on a daily basis.

a 5% change in stock is minimum,,but if the 'market' crashes 5% it's considered a 'catoshproe or 'CRASH'
More...

Day Traders don’t risk $ but %. They trade on margin vs cash. They are active vs passive.

But stocks ain’t like options.
A square ain’t like a cube on steroids.
 
From my colleague, Joe Easton who follows stock index futures very closely daily:

When trading ES you need to consider points, more than account size and certainly more than percentages. Due to the high leverage using percentages equates to irrelevant information. For example; risking 2.5% of a $2000 account is $50. That is one point on one contract for the ES. This is very fantastical thinking to to risk 1 pt each day and have success. Tight stops and precise entries are imperative for profits. However with this small of a risk you would have to pick 1 pt from the high or the low to have a profitable result. In my opinion 4 to 5 points risk per day to try to get about a 3:1 return to risk. If this amount is too much risk, you should consider trading micro futures until your balance is greater.
 
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