when i started trading the firms only let you trade 100 shares per position as you got better you traded a few 1000 shares. 1 of the reasons they train you this way is so you don't feel mentally different trading a few 1000 shares. i think a lot of people trade without having any money and lose there cool. 275 bucks at 1130 is turned into -200 because they don't respect money and need lot more than that.
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smaller size makes you a better trader?
- Thread starter brokerboy
- Start date
when i started trading the firms only let you trade 100 shares per position as you got better you traded a few 1000 shares. 1 of the reasons they train you this way is so you don't feel mentally different trading a few 1000 shares. i think a lot of people trade without having any money and lose there cool. 275 bucks at 1130 is turned into -200 because they don't respect money and need lot more than that.
Quote from jokepie:
I believe, "One day" there is this SWITCH that just flips - psychologically and then the real game start. Until then its all irrelevant.
I believe there are many points along the learning path where you realize something and a switch is flipped.
Understand the psychology of learning and you'll get better at learning to trade.
Quote from Zr1Trader:
Is it just me that thinks 2% is too steep? 5 losers in a row and thats 10% of your account. I like to use .005% per bet personally. I usually take anywhere from 7-20 trades a day with a DAILY loss limit of 2%.
I personally use 1% but it depends on personal taste and how often you consider your account balance. What do I mean? Well using your 2% example, if you have say a $50k account at the start of the day and you say "ok 2% of 50k is $1000 so that is what I am going to risk every trade today" then yes you will lose 10% of your account on 5 losing trades. However if you take 2% of your account balance just before each trade then you would only lose about 6% of your daily starting balance. Why? Negative compounding. The first trade you lost $1k (2% of 50k), the second trade you only risked $980 because your account balance was only 49k, the third trade you only risked $960 because your account balance was $48020, and so forth. I am not saying one way or the other is "correct", I just wanted to point out the differences to help people decide what is right for them.
i don't recognize stops on any one position that i put on, but i put a 5% stop loss on my entire days trading. that has worked quite well for me. sometimes i'll hit it because i lost 1-2% on 3 different trades at the same time and hit my 5% for the day, but more often than not it is just one trade that i never see the light of day on. i also look to take about .5%-1% out of each trade i put on- so i've made most of my money flaunting the 1:3 risk/reward ratio that everyone seems to live and die by.
Quote from dumb_mother:
i don't recognize stops on any one position that i put on, but i put a 5% stop loss on my entire days trading. that has worked quite well for me. sometimes i'll hit it because i lost 1-2% on 3 different trades at the same time and hit my 5% for the day, but more often than not it is just one trade that i never see the light of day on. i also look to take about .5%-1% out of each trade i put on- so i've made most of my money flaunting the 1:3 risk/reward ratio that everyone seems to live and die by.
The best system is the one that works for the person using it. If this works for you then kudos for finding what works for you. Many never will.
Quote from Visaria:
The numbers are wrong. 1% risked and lost 50 times leaves you with about 60%. 2% risked leaves you with about 36%.
I would advise no more than 0.5% per trade, which is what i use on position trades and something like 0.1% (or even less) on intraday trades.
I threw together some VB code to determine the values. In the code I multiplied the current balance by the risked % (1 in this case) and subtracted the resulting number from the current balance. I then looped through that code the desired number of losing trades and finally calculated what % of starting balance was left. Those are the values that I got.
How did you come up with your values?
Quote from Zr1Trader:
Is it just me that thinks 2% is too steep? 5 losers in a row and thats 10% of your account. I like to use .005% per bet personally. I usually take anywhere from 7-20 trades a day with a DAILY loss limit of 2%.
.005% risk per trade, is that a typo ? That's a million dollars account value per point risk on the emini.