Sit on Hands, when risk per trade is too big?

[SimpleMeLike]

Hello,

Per my risk management rules so far, I can only risk max $200 per trade trading the CL, however today, the setups are clear, but the risk far exceeds my risk tolerance rules. I missed alot of good money by not increasing my risk to like $300. So, I just pass on the trade. But its pretty tempting to not jump in and take the increasing my risk just for today, but I will be pissed starring at the big loss afterwards. And this leads to other mistakes and emotional bad day.

Is this the part of risk management trading, I often read and hear about regarding protecting capital, if the risk too big, I have two choices decrease position size, or sit on hands?

If so, at least I know I am doing the right thing.

Thank you,

 

[Scataphagos]

Is this the part of risk management trading, I often read and hear about regarding protecting capital, if the risk too big, I have two choices decrease position size, or sit on hands?

Unless you're the kind of guy willing to "risk it all on red or black", then yes.

 

[SimpleMeLike]

Unless you're the kind of guy willing to "risk it all on red or black", then yes.

Thanks Scataphagos,

No I am not that guy. I do not want/need to risk it all.

 

[zoned_post_meridiem]

If you'd be mad about losing $300 (but are ok losing $200), stay at $200. Every risk management strategy will miss some trades that could have been winners.

 

[SimpleMeLike]

If you'd be mad about losing $300 (but are ok losing $200), stay at $200. Every risk management strategy will miss some trades that could have been winners.

Thanks zoned_post_meridiem,

Just making sure I was on the right track by getting other traders opinion on the risk management, which is something I am trying to get much better with.

Correct me if I am wrong, but I believe this is where discipline in trading comes in at. Doing the right thing per the risk rules.

 

[Scataphagos]

Thanks Scataphagos,

No I am not that guy. I do not want/need to risk it all.

I know the opportunity seems juicy... but you don't have to make money today. What you need to do is to not lose a lot today (or any day).. and this environment is ripe with the opportunity to lose big.... or win big. Like I said, "red or black".

(My preferred play has always been to take a big position... so that if I get it right, I make a good amount... but only when I can control the risk. That's what TA is all about. With this volatility, there is no/little "risk control" other than hope... which seems to have a way of not showing up when you need it most. JMV)

 

[SimpleMeLike]

I know the opportunity seems juicy... but you don't have to make money today. What you need to do is to not lose a lot today (or any day).. and this environment is ripe with the opportunity to lose big.... or win big. Like I said, "red or black".

(My preferred play has always been to take a big position... so that if I get it right, I make a good amount... but only when I can control the risk. That's what TA is all about. With this volatility, there is no "risk control" other than hope... which seems to have a way of not showing up when you need it most. JMV)

Thanks Scataphagos,

You right! And I know myself. If i take the position of a risk outside my tolerance, I will go into emotional let's get it back, bang the desk, the strategy do not work, why i did that, fill in the mistake column of the journal, another stupid mistake, now lets go rush into another trade roller coaster. Next thing you know its 1pm and I am starring at over trading of nearly 13 trades and some big losses.

It all looks juicy.

 

[wrbtrader]

...It all looks juicy.

It only looks juicy if you have a discipline problem.

Sure, there's chaos because of Corona-Virus, Yield lows never seen before plus the Oil problem after OPEC deal failure...it all looks juicy.

This isn't a Zombie apocalypse.

wrbtrader

 

[ironchef]

Hello,

Per my risk management rules so far, I can only risk max $200 per trade trading the CL, however today, the setups are clear, but the risk far exceeds my risk tolerance rules. I missed alot of good money by not increasing my risk to like $300. So, I just pass on the trade. But its pretty tempting to not jump in and take the increasing my risk just for today, but I will be pissed starring at the big loss afterwards. And this leads to other mistakes and emotional bad day.

Is this the part of risk management trading, I often read and hear about regarding protecting capital, if the risk too big, I have two choices decrease position size, or sit on hands?

If so, at least I know I am doing the right thing.

Thank you,

Uncle Buffett:

1. Be greedy when others are fearful.

2. You wait for a fat pitch, when it comes, don't bunt.

But easier said than done. If you can do that, you belong to the 0.1%.

 

[DevBru]

If the current market conditions don't fit with your strategy and risk management, just stay out ...

Investing/trading is not only about the money you make but also about the money you don't lose.