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How much of your account do you risk per trade, on average?
They got a little off-topic, but were just kidding around about the Mike Tyson quote.
There's no need to call anyone "stupid" for any reason. We need everyone to remember the forum's standards of civility and mutual respect. I have taken the above post down, and I hope this will be the end of it.
Thanks.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Very interesting bet-sizing strategy for day trading. I'll have to code this up for my automated strategy. I am very curious to see the results of putting in a "stop trading for the day" rule....after 3 losers in a row.
BTW: who is "FT" ?
He has done numerous webinars for this site, one of them included a slide on position sizing which I took a screenshot of a long time ago and saved with other general trading stuff.
This was the picture below, with trade size on the right hand axis. The example starts with four lots and takes quite a few losses and gradually reduces size but then brings it back up as he starts having some winning trades.
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
Well, something is wrong with the chart....as it shows less than 1 contract for points at 9, 10, and 11.
Does that mean you need to go to MES ?
Does he divulge the formula used to develop the chart values ?
I am back to throw a little common sense into this thread since it appears to me over and over again that more than 90 % of all losing traders to do the same thing over and over again and expect different results! i will use a broad example with broad estimates of the nasdaq index for my example but risking 1 to 2 % because old books say this is correct is about as intelligent in my opinion as eating mercury for your health!
1. Books lie
2. people lie
3. look at your own trading and say hmm what would have happened if i had risked 5 % or 10 %
4. brokers and exchagnes who charge you on transactions love the 1 to 2 % rule
5. WHY NO THREADS about at what % to use to take profits? oh right the books say 1:3 risk reward so um ok 2 % x3=6 % take profit!
6. at 2 % you have what roughly 50 trades? if 90 % lose anyway do the brokerages want you bombing and losing 10 % at a time or 2 % at a time?
7. i say again why no talk or threads about taking profits and that % oh right because it changes based on teh mkt right oh ok sure and that % risk doesnt change why is that.
Example : 2020 feb to march back to aug 2020 rough estiamtes of price for example. using the cash mkts
i have 100k to invest/trade i must use all of it at once (btw most investorstake more risk and are better tradrs than 90 % of day traders!) if you disagree with this then please check your profits versus just buy and hold.
feb nasdaq at 9000
buy 100k of Nadaq at 9000
with 2 % loss rule I can risk $ 2000 dollars of loss and i must exit this trade!
9000x.02= this is equal to a 180 point drop in the nasdaq assumign I have 100k invested cash
I am out in a day. so then what i keep buying and exiting.
until when the mkt in march bottomed and i have what how much left from my 100k?
lets just say we stopped trading and i have 70K left after all of my 2 % stop outs. now what?
wwell the mkt reversed and rallied hard but guess what. on that way up there were tons of 2 % stop out points!! at losses even in a bull rally of epic proportions!!
but what if you risked 50 % of your "total amount I am willing to lose in this trade or investment"
buy 100k worth of nasdaq at 9000 risking 50 % so 50k an that would be
nasdaq 4,500 before you exit. so fabrurary and the march drops
you would have been down on paper but not out!! and you would have gained all of it and then some back as
the nasdaq went to 11,000!
yes I have hindisght bias but even if i didnt this would still work. the problem is that mkt direction and what you risk are 2 different things!
what is your personal skill set! how many % off of a typical bottom or a typical top are you wrong by? are you off by 180 points? 1 % 5 % that is what you should use is your own personal standard error in takign trades and use that to make sure you are in it to win it!!
Stop using leverage now. if you are trading futures to short then the margin doesnt matter . you trade 1 es micro for cash!! yes cash so
roughly a 1 lot micro for every 15k in your account! you are not hedging you should not be using leverage!!
if everyone understood leverage was for hedgers to make it cost effective and not day tradrs then maybe 80 % would be small winners and learn how to trade before the money was gone. i often risk 50 % of my entire accoutn on a trade why? because my account sin futures
are always VERY SMALL! one computer glitch with all that leverage and your "AMP" fcm goes bust and so do your funds sure they are protected..lol nothing against AMP but they were the last ones to pay after oil went negative and many thought they were going bust. i like amp by the way but from a big money standpoint i would not keep a lot of money at any low margin fcm/IB.
anyway use less leverage and stretch out your % risk based on what your trades are doing? if you do not know what you are trading or how or why or when and you can do a statistical analysis on your missed (losing ) trades then you have no clue how good you are!
do you miss the bottom by half a percent everyday ? then stretch out your % risk 1 % on the next one so you will be in the trade when it turns the
entire problem with retail is that they have rarely met or know or traded with or next to anyone who is actually consistently profitable so all they do is go on garbage in my opinion from online blogs and old books. it is all garbage in and grabage out so do your own thing and make sure it is different from all the other LOSERS! because believe me odds are 90 % on this blog and 90 % on fintwit no matter what they show are NET LOSERS !
in this example he is risking 100% of his daily loss limit! do you see that 100 % of 1,200 he is willing to risk not 2 % of his daily loss limit!
your entire account is not your daily loss limit is it? or maybe it is!!
