Risk management techniques

[murray t turtle]

Reduce position size with each successive loss.
Different accounts have different TFs, separate scalping, swing trading accounts vs long term investments.

Good points + good TF + good %. But i dont aim for scalping pennies[Not a market maker, but more power + pennies to themLOL]
BUT YOU changed the position sizeLOL,.
ACTually that reduction can be good idea with trading, especially with a good hit rate %.
OF course with real low hit rate one could not change the position size+ may do OK anyway.....
For sure NOt all trades or investments have the same % chances;
SEPT goes doWn for stocks much; longs small or not %@ all \generally speaking.

 

[Laissez Faire]

I don't even know my % risk per trade, but the one rule I follow fairly well is that my initial entry is always on my smallest size. For me, that's one ES contract. And usually with a maximum stop at 10 points, but generally it's around 5 points in current volatility.

Next, I'll add to my trade as it moves in my favor. The initial profit on the 1st contract "pays" for the risk on the second or third add.

Done properly (I can still be sloppy from time to time), this ensures that I always take my full stops on my smallest size and some big winners on larger size.

The cost of adding is that you'll "use" prior profits to pay for a breakeven exit on the entire position, so it's best done when the market is trending or at least volatile enough that you can anticipate a larger move within a range.

Today, on ES, it's less likely to be worthwhile as the market's stuck in a range and may very well be so for the entire session.

 

[TheDawn]

I saw that. Congrats.
I'd have been sitting with a small loss.

Thank you. Glad I followed the Number 2 rule of trading: Let the profit run. There were posters suggesting to me to get out right after the bump up but I held it through towards the EOD.

 

[murray t turtle]

I don't even know my % risk per trade, but the one rule I follow fairly well is that my initial entry is always on my smallest size.

Next, I'll add to my trade as it moves in my favor. The initial profit on the 1st contract "pays" for the risk on the second or third add.
Done properly (I can still be sloppy from time to time), this ensures that I always take my full stops on my smallest size and some big winners on larger size.

The cost of adding is that you'll "use" prior profits to pay for a breakeven exit on the entire position, so it's best done when the market is trending or at least volatile enough that you can anticipate a larger move within a range.
Today, on ES, it's less likely to be worthwhile as the market's stuck in a range and may very well be so for the entire session.

%%
Actually a brilliant, battle tested post + plan.
Since title= ''Risk management.'' ES front month =40% buy, short medium , long term\
barchart.com
SPY =100% buy, short term, medium long term. Personal opinion ,its not the dividends difference, its the leverage; or maybe be both.
Buyone sell 2,has done well swing trading ES; me i have enough drawdowns on my plan or plate.
Good uptrend on SPY + related except for FEB/ HI.
IBD has added 4 or more times, in a very good trend ; but that's a very good trend + long trend / cashmarkets. Thanks

 

[Viski]

Risk management wise …

I take a small fraction of my bankroll to the casino then I use another fraction for each bet depending on the cash at hand (+- PnL)

I enter the trade with half the full size and if it works I double down (Full size).

Example …
Bankroll is 10,000
Take 10% to the casino (1,000$)

Bet 20% on each bet,
Let’s say I already lost 200$ today,
1,000 - 200 is 800 x 0.2 is 160
Split in two is 80$

If it doesn’t work then lose 80$
If it works then double down, risk 160$

…

Why did you take 20% percent of your remaining? When you beginning, did you take same percentage of total?

 

[Sekiyo]

Why did you take 20% percent of your remaining? When you beginning, did you take same percentage of total?

Take x% to the casino
Take y% per bet from x%

If x and y are 10% then you’re going to risk around 1% per bet. (0.1 x 0.1) but as you daily bankroll grows or shrinks then the $risk is going to exponentially increase or decrease.

You can use your stats and the Kelly criterion to determine the percentages on a daily (x) and trade (y) basis. Or whatever you’re comfortable with but never more than full kelly.

Kelly might tells you to bet 20% per day and 15% per trade or 3% absolute (0.2 x 0.15)

You can update Kelly on a daily basis.
Based on your up to date statistics.

 

[GotherL]

It all comes down to sizing your comfortable with losing at any moment. If you don't find yourself immediately revenge trading or doing other stupid chit you are approximately 1/4th the way (perhaps higher) of achieving success as a trader.

 

[Lee-me]

Small accounts swept periodically. Max position on the initial, take partials as it moves in favor.
Reduce position size with each successive loss. Max loss per day, Daily TP reached, stop trading.
Different accounts have different TFs, separate scalping, swing trading accounts vs long term investments.
Different accounts different strategies. Some stay dormant for long terms of time.
Higher risk accounts are smaller.

Thank you for sharing all of that. I appreciate it!

 

[Lee-me]

Don't hold losing trades!!

I just lost a lot of money on this. I can't get rid of losing positions and I keep them till it's too late.

 

[Lee-me]

Risk management wise …

I take a small fraction of my bankroll to the casino then I use another fraction for each bet depending on the cash at hand (+- PnL)

I enter the trade with half the full size and if it works I double down (Full size).

Example …
Bankroll is 10,000
Take 10% to the casino (1,000$)

Bet 20% on each bet,
Let’s say I already lost 200$ today,
1,000 - 200 is 800 x 0.2 is 160
Split in two is 80$

If it doesn’t work then lose 80$
If it works then double down, risk 160$

…

That's interesting!