risk management for day trading

serially correlated. You must distinguish between a risk/reward ratio and forget daily limits. I do believe daily goals are a new age mumbo jumbo taught by some ex-daytraders turned risk management guru experts. no math will support this.
You always should focus on risk per trade/reward per trade and the worst idea is to forgo taking a dollar profit at lunchtime because you are up for the day $500 and take that 3/8.
You will go broke that way. The idea of risking 2 percent per day is different but never say I have made this much so I can do this and that.....
 
Quote from andrasnm:

serially correlated. You must distinguish between a risk/reward ratio and forget daily limits. I do believe daily goals are a new age mumbo jumbo taught by some ex-daytraders turned risk management guru experts. no math will support this.
You always should focus on risk per trade/reward per trade and the worst idea is to forgo taking a dollar profit at lunchtime because you are up for the day $500 and take that 3/8.
You will go broke that way. The idea of risking 2 percent per day is different but never say I have made this much so I can do this and that.....
More...

It seems like you didn't understand my post. I am not talking about setting a hard cash daily target. That indeed, is foolish. There is no reason not to take additional possible profits just because you already made your $XXXX. What I’m talking about is assessing how much can be done on every day based on the activity so far. Different styles of trading work better or worse on different types of day. If it's not your type of day and you are + or - for the day so far, consider the possibilities to make or lose more money against losing what you made or the chances to recouping your loses.

If you have a wide variety of trades for every type of day and developed a way to recognize the type of day early during the session. You will know to adjust accordingly and will not need to consider stopping to trade for the day. You must remember that new traders do not have such a basket of capabilities.

TM Trader
 
got to tell you there is some good advise in here.Having a firm with many guys trading my capital ,I see a ton of good and bad.One thing to always remember is the down side and then look at the up said.Myself as well as my guys look to make 4-1 on trades,ie make 20 cents or lose 5.I have found that playing the slippage in stocks is the highest probibility of making money today.What that means is after seeing a stock break a 50 or 20 or interday H/L we will be on that stock and take whats given to us 3,4,10,20 cents and then unload in a sort time on the offer to get the rebate and reduce our overall expense.I have also run a large retail firm and after seeing 100's of guys so called reading the tape and then paying commissions VERY VERY few succeed.Sure some will grind out a few thousand dollars a month but in this game if you cannot make min 10,000 per month the stress is just not worth it.Hope this helps.
 
I prefer to risk 0.25% to 0.50% of my account equity per trade so that even in a long losing streak my drawdown isn't significant.

Typically, a losing streak may last as long as 10 losing trades in a row. If you're risking 1 or 2 percent of your account equity and you get caught up in a losing streak of 10 losing trades in a row then you could lose up to 20% of your equity ... just that fast.

That's a quick way to blow-out city.

If you're risking $100 per trade ... you need $20K - $40k in your trading account.

It's foolish to think someone can open a trading account for a couple grand and really make it as a trader.
 
did what you are doing Gladiator and it will wipe you out.
It is destructive on your confidence too

good counsel given on this thread already
but

trade very very small. 100 shares.
risk no more than 1/2% on your stops

the setup is not nearly so important as
risk management and trade management.

I had to go to TFMS.com and watch daily in the chatroom for 3 months to understand in real time, what is a low risk trade

and most importantly when to NOT trade.
key concept in daytrading.

but for now, give up trying to make any money. just trade to win in a trade.

you need partials and targets and how to set reasonable expectations.
that is why trading along side some one who knows what they are doing.
Toni and Brandon have the best chatroom for education I have seen in two years.

woodman
 
Quote from woodman:


risk no more than 1/2% on your stops
More...

1/4% would be even more prudent for a newbie... in my opinion, 1/2% is actually a reasonably sized risk, not a small risk...

Moreover, I feel that 1% is a large risk and 2% is a "crazy" risk... newbies should steer clear of 1% and 2% which are, in my view, the territory of the consistent trader who has the stomach to withstand fairly significant drawdowns, as a result of his longer-term consistency...
 
Quote from Gladiator4444:

here are the trades I took today:

sort EXPE @70.49-----covered @69.82(500shares)

long EBAY @102.23----covered @101.80(800shares)

long WMT @55.29----covered @55.17(800shares)

short EXPE @70.34---covered @70.79(500shares)

long MER @51.45-----covered @51.12(1000shares)

short MER @51.42-----covered @51.21(500shares)

$555+$170comm=-$725
More...

why are you generating so much commission?

Pointdirecx, MB Trading, and a whole host of others would cut that drastically .

also, what was your reasoning for dollar value per position, since you're one of those traders that doesn't seem to care for size

you're going to have to dollar average your account per position and maintain no more than 2 or 3 active stocks per engagement, not this many as you have done

also, what were your reasons for covering your shorts? you reached your pershare cent profit target? events scared you into covering? what changed?

shorting is not the game its presented as being, there's scalp shorting, sling shot shorting and longer term hedged shorting. which method were you using, or were you able to quantify your trade into a method?

go through these questions and see if you like your answers, you may find that you don't, and there in lies the need for changes accordingly
 
You have to have a trading plan (loss target) and stick to it. Have it set in stone in your mind before you even make your trades!
 
You must log in or register to reply here.
Back
Top