I think that is still on a higher side. On a 10k account max loss should be like 200usd. That's my take. For a 2k account better trade mini lots 0.1-0.5 lots.
How to improve my risk management for daytrading.
- Thread starter GotherL
- Start date
That's right! What risk management techniques are you using?
I allocate more risk on trades that have higher strike rates based on my journal results. Max 5 percent on my swing failure patterns during consolidations and max 1.5 percent on lower strike rates. But i i also have levels that enable me be certain to cut my losses early. I also don't tamper with my stops if the trade shows that its still valid. Eg. On my recent eurgbp trade i i t a structural rejection and price didn't even close or came near the level for more than three days so i kept on holding and never moved my stops till targets were hit
The reality is you aren’t going to go anywhere with a $2,000 account trading equites risking 2% without using leverage. Even if you had a good year and make 30% return you traded all year to make $50 a month for your time. Find an edge that works and figure out a way to leverage the $hit out of it if you want to run the account up.
Risking 2% for me is too much while daytrading multiple markets from sunrise to sunset, in matter of few hours I can easily end up -40% drawdown ... 5 losses here, 8 losses there, 3 losses there now you have 16 in a row ...
But if I daytraded just 3 trades per day (can we still call it daytrading?) with 1 market I could easily risk 2% because now "day type variation" (rangings day vs trending days) comes into play. Meaning after 3 hits today there is a higher chance tomorrow the market will behave differently (more in my favor) and the losing streak will be broken
But if I daytraded just 3 trades per day (can we still call it daytrading?) with 1 market I could easily risk 2% because now "day type variation" (rangings day vs trending days) comes into play. Meaning after 3 hits today there is a higher chance tomorrow the market will behave differently (more in my favor) and the losing streak will be broken
At some point, at the low end of capitalization, the percent at risk method, is really not that useful. Consider the percent of commissions, or if commission free, the spread or slippage, to the P/L. Once those are double digits, it might be telling you there is not enough capital. A lot of people do the percent method, thinking this is what I will do when I am moving orders of magnitude more. But you are not moving orders of magnitude more.
Another way to look at this is saying I made 1000% on a penny, although true, does not really translate into making 1000% on 100K. The realities of trading kick in.
Another way to look at it when you have smaller amounts is, by pure dollar amount. Then put that back into percent as a check. If I were doing 2K, I would say I will risk 25% because 500 is something I can replace. That frees me to make 25% on the upside (assuming you have a legitimate plan). Then in the end I have 2500 in a trade. How long does it take to get to 2500 2% at a time? You might have time, but truthfully, not that much time.
Try to get to 10-20K quickly taking some WELL CALCUATED and THOUGHT OUT risk. Then you can start with the 2% stuff.
Of course, all I said, might be totally bunk for you, or in general. Only you can decide.
Another way to look at this is saying I made 1000% on a penny, although true, does not really translate into making 1000% on 100K. The realities of trading kick in.
Another way to look at it when you have smaller amounts is, by pure dollar amount. Then put that back into percent as a check. If I were doing 2K, I would say I will risk 25% because 500 is something I can replace. That frees me to make 25% on the upside (assuming you have a legitimate plan). Then in the end I have 2500 in a trade. How long does it take to get to 2500 2% at a time? You might have time, but truthfully, not that much time.
Try to get to 10-20K quickly taking some WELL CALCUATED and THOUGHT OUT risk. Then you can start with the 2% stuff.
Of course, all I said, might be totally bunk for you, or in general. Only you can decide.