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Crazy i know, but still


Discussion in Psychology and Money Management

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Crazy i know, but still

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  #1 (permalink)
Memphis,TN
 
 
Posts: 232 since Sep 2010

I wanted to get different opinions on the following Question......

" Would you ever risk 25% or even up to 50% of your account on 1 singe trade, " IF " the trade setup was PERFECT , based on your own chart reading/technical analysis

I have seen trade setups that are almost Flawless , and have made substantial moves almost immediately upon entry

They don't occur that often, but when they do, a 20% move in the underlying is not far fetched more times than not

Chart patterns such as ( wedges, flags, Pullbacks to double and triple tops/bottoms, fib. clusters , etc.. )
of these patterns/setups... sometimes there are those that have a cleaner and certain look to them..... there are just those setups that just " Stand Out " above the rest



I know it may be a crazy thing to consider, but with a smaller account of say $3,000 and risking 25% to 50% of it on a single trade ..... as long as win or lose on the trade , it won't hurt you financially

It could easily be considered gambling by risking such a high percentage of your account, but with the following defined reasons for such a trade....

1. having a smaller account $3,000
2. If you were to take a FULL Loss on the trade of this magnitude and it won't hurt you financially
3. Only implement such a high Risk of your account on That " PERFECT " trade setup
4. And Lastly, your desire to increase your account size as fast as possible

Just a thought and wanted to get others opinions
Thanks much

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  #3 (permalink)
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No, because PERFECT never really happens. Setups may look perfect in hindsight, but real time as the bar is forming and you are about to risk 50% of what you have on it, I bet it won't be so perfect or easy to pull the trigger. Its just not that easy.

As a trader my job is to manage risk, cut losers quick, and let (and push) winners as hard as possible. Risking too much on one trade is a violation of rule 1. And the odds are stacked against you, odds are you will be wrong and lose that trade.

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  #4 (permalink)
Louisville, Kentucky
 
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mdsvtr View Post
I wanted to get different opinions on the following Question......

" Would you ever risk 25% or even up to 50% of your account on 1 singe trade, " IF " the trade setup was PERFECT , based on your own chart reading/technical analysis

No, that would be gambling. I'm a speculator, not a gambler. There's a big difference. If you wanted to gamble your money and chose to use the markets to do it then that's up to you, but that's a different question entirely. Some people love to go to the casinos knowing full well that they'll likely come out with less money than they started with. I know folks that do that and they do it because for them it's the price of entertainment, not much different from me going out for a nice steak once in a while or buying tickets to the play.

If you lack the sort of capital you need. For the record, I don't think $3000 is the sort of capital you need if you want to have a fighting chance at this. I would suggest getting a second job or cutting back expenses and squirrel away as much money as you can until you have something decent to work with.

Granted I'm making a lot of assumptions in my reply and if those assumptions are wrong I apologize.

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  #5 (permalink)
Birmingham UK
 
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mdsvtr View Post
It could easily be considered gambling...

Which is exactly what it is.

Perfect setups do exist, and guess what? they can just as easily be part of a perfect setup in the opposite direction on a higher timeframe or in a different context.

See them, use them, have some fun and some tears, but don't rationalise them as being something other than what they are. Otherwise the temptation to size up just grows and grows.

Cheers

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