I think risk managment is very important.
It is hard to evaluate what you are doing based on the trades. We would also need to know account size, and what your risk mgmt strategy was for each trade, e.g. did you have profit and loss targets.
For intraday trading, one way is to have profit and loss targets, e.g. EBAY @ 102.23, you think it will rise to 102.75, stop at 101.90. If you trade 1000 shares, you are risking $333 to possibly make $770. Some people have software automatically calculate profit and loss targets and enter limit orders to close the trade at those prices. If you use a mental stop, it is important to be diligent in taking the profits and esp. the losses..
Some people always takes the profits but don't take the loss or even average down on a loser which becomes a bigger loser and turn into into an 'investment'. The best way is to take the losses quick and let the profits run. After trading for awhile, you can analyze your trades to calculate your winning %, average gain in winning trades, average loss in losing trades.. If your average loss in losing trades is much greater than average gain in winning trades, then you've got a problem...
Another way to measure risk is the % of capital you are allocating to each trade. If you have a 100k account, and you buy 1000 ebay @ 102, you are using over 100% of your capital on one trade. If this trade goes against you, the loss would be very significant. For intraday trading with specific profit and loss targets, it is risky. For a longer timeframe, e.g. swing trading, holding 1000 ebay in a 100k account is very risky. The longer the timeframe, the smaller each position should be in % of capital.
When trading a particular stock, one has to consider the daily range / volatility of the stock. Trading 1000 of RIMM is much moire risky than trading 1000 MSFT even though both are about the same price $25 because RIMM is a much more volatile stock.
If you are trading ETFs/index futures, you can increase the risk somewhat because these instruments are less risky than in individual stock.
You also, should probably have a maximum position size, e.g. 1000. This is mainly an issue with lower priced stocks. I wouldn't recommend new traders buying 5K of WAVX or CHINA just because 5K is only 25k or 60k. Look at CHINA today! It opened around 13.50 and hit 9.50 intraday!! Great intraday trading action if you were on the right side; But a very risky stock.
It is okay to increase the risk by adding more to a winning position as long as the stock is still attractive risk/reward at the current price. This works great on trending days when the market or a sector goes up all day or down all day. You can also trade around your position by selling pops and buying pullbacks. It helps to have a broker which charges per share, e.g. $1/100 shares if you use these stategies.
For new traders it is helpful to stick to trading very active stocks / futures because there is more liquidity to enter and exit your positions.
It is hard to evaluate what you are doing based on the trades. We would also need to know account size, and what your risk mgmt strategy was for each trade, e.g. did you have profit and loss targets.
For intraday trading, one way is to have profit and loss targets, e.g. EBAY @ 102.23, you think it will rise to 102.75, stop at 101.90. If you trade 1000 shares, you are risking $333 to possibly make $770. Some people have software automatically calculate profit and loss targets and enter limit orders to close the trade at those prices. If you use a mental stop, it is important to be diligent in taking the profits and esp. the losses..
Some people always takes the profits but don't take the loss or even average down on a loser which becomes a bigger loser and turn into into an 'investment'. The best way is to take the losses quick and let the profits run. After trading for awhile, you can analyze your trades to calculate your winning %, average gain in winning trades, average loss in losing trades.. If your average loss in losing trades is much greater than average gain in winning trades, then you've got a problem...
Another way to measure risk is the % of capital you are allocating to each trade. If you have a 100k account, and you buy 1000 ebay @ 102, you are using over 100% of your capital on one trade. If this trade goes against you, the loss would be very significant. For intraday trading with specific profit and loss targets, it is risky. For a longer timeframe, e.g. swing trading, holding 1000 ebay in a 100k account is very risky. The longer the timeframe, the smaller each position should be in % of capital.
When trading a particular stock, one has to consider the daily range / volatility of the stock. Trading 1000 of RIMM is much moire risky than trading 1000 MSFT even though both are about the same price $25 because RIMM is a much more volatile stock.
If you are trading ETFs/index futures, you can increase the risk somewhat because these instruments are less risky than in individual stock.
You also, should probably have a maximum position size, e.g. 1000. This is mainly an issue with lower priced stocks. I wouldn't recommend new traders buying 5K of WAVX or CHINA just because 5K is only 25k or 60k. Look at CHINA today! It opened around 13.50 and hit 9.50 intraday!! Great intraday trading action if you were on the right side; But a very risky stock.
It is okay to increase the risk by adding more to a winning position as long as the stock is still attractive risk/reward at the current price. This works great on trending days when the market or a sector goes up all day or down all day. You can also trade around your position by selling pops and buying pullbacks. It helps to have a broker which charges per share, e.g. $1/100 shares if you use these stategies.
For new traders it is helpful to stick to trading very active stocks / futures because there is more liquidity to enter and exit your positions.
