Risk Management is the third most important element of trading in my opinion (the initial two are Psychological State and Strategy (Fundamental & Technical) Application).
I wanted to provide some information about how I discipline myself and impose Risk Management into my trading. Before I do that, I want to make it clear that every trader is different; every trader has different goals, targets and monetary requirements. This may not be suitable for your style and you may want to adapt the approach that I use – that’s perfectly fine.
In any case, let’s start with percentage risk per trade that I take and strictly stick by:
- SHORT TERM TRADES*: 0.5% per trade maximum (50 tick stop loss maximum)
- END OF DAY/ SWING TRADES: 1.5% per trade maximum (150 tick stop loss maximum)
Hopefully this gives you an outline of how I manage my risk and approach to the markets. If you have any questions, use the form below and I’ll get back to you personally.
*SHORT TERM TRADES: These can be anywhere from intraday up to 5 days. I will only trade SHORT TERM if there is a decent amount of market volatility. If volatility is low, I will lengthen my time horizon. Trading SHORT TERM/INTRADAY in a low volatility environment is a fast track way to deplete your account.