What % are you willing to sacrifice to maintain a position?
- Thread starter Cuddles
- Start date
day trading is out as soon as the "uncle" stop is hit if I don't get out because price isn't going my way. But generally I get out if price doesn't move my way. I'm OK spending a few hundred figuring out whether I'm right or wrong because the payoff is many multiples.
It's said :
1. Know where to exit before entering the trade.
Find a spot where it does disprove your scenario.
Let's say you look for a target of about 10 Pts north.
100Pts south might be enough for your trade do be trash.
2. Don't risk more than you are willing to lose.
If your willing to lose half your account on that trade,
Then just divide half your account with the 100Pts worth.
General rule is don't over bet.
Prudence is courage's requirement.
If you can't stand the hit in the kitchen,
Then you're definitely over leveraged.
5% sounds like a maximum, worst case.
2.5% sounds way better.
1% is so comfy.
0.5% is easy.
1. Know where to exit before entering the trade.
Find a spot where it does disprove your scenario.
Let's say you look for a target of about 10 Pts north.
100Pts south might be enough for your trade do be trash.
2. Don't risk more than you are willing to lose.
If your willing to lose half your account on that trade,
Then just divide half your account with the 100Pts worth.
General rule is don't over bet.
Prudence is courage's requirement.
If you can't stand the hit in the kitchen,
Then you're definitely over leveraged.
5% sounds like a maximum, worst case.
2.5% sounds way better.
1% is so comfy.
0.5% is easy.
100%
100% for an individual position. Risk control should focus on the aggregate.
100% of what percentage ?
To lose 100% of 5% is losing 5%.
When losing 100% you just go home.
Done. There is no more aggregate for you.
For each trade, there are 2 stops.
Stop 1 is based on the setup, or what I call a structure stop. This stop can be hard or mental, it does not matter to me, as long as volatility is considered. A hard structure stop is not prudent for all trades. If the expected structure (aka reasoning) for the trade is negated, it's time to bail and say next!! An example would be a momentum play, using, say, the previous bar HL as S/R. Versus a different trade that uses, say, a trendline breach or break as a negation. These are just simple examples. Every trade is unique in it's own way.
Stop 2 is what I call a catastrophic stop. It is based 100% on money. It's a money stop! It is a hard stop. And it exists on every trade. Several factors go into the exact amount, but the purpose of this stop is to prevent an account catastrophe due to acts of god... power outage, face plant on the desk for whatever reason, working environment distraction, human stupidity, etc. The key here is that your platform and execution route MUST provide/allow server-side orders.
HTH
Stop 1 is based on the setup, or what I call a structure stop. This stop can be hard or mental, it does not matter to me, as long as volatility is considered. A hard structure stop is not prudent for all trades. If the expected structure (aka reasoning) for the trade is negated, it's time to bail and say next!! An example would be a momentum play, using, say, the previous bar HL as S/R. Versus a different trade that uses, say, a trendline breach or break as a negation. These are just simple examples. Every trade is unique in it's own way.
Stop 2 is what I call a catastrophic stop. It is based 100% on money. It's a money stop! It is a hard stop. And it exists on every trade. Several factors go into the exact amount, but the purpose of this stop is to prevent an account catastrophe due to acts of god... power outage, face plant on the desk for whatever reason, working environment distraction, human stupidity, etc. The key here is that your platform and execution route MUST provide/allow server-side orders.
HTH
I risk it, not for a position, but for market knowledge, which is priceless.
if you have perfect risk management you have saved your account but lost market knowledge.
which do you prefer is up to you
Last edited:
I prefer risk management thank you very much.