Money Management

This is a discussion on Money Management within the First Steps forums, part of the Reception category; I have £40K of my own capital (in addition to a 'pension' portfolio of £100K which I will not trade ...

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Old Feb 12, 2006, 2:42pm   #1
 
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Joined Jun 2004
Money Management

I have £40K of my own capital (in addition to a 'pension' portfolio of £100K which I will not trade with). I intend to use £20K of the £40K for trading and keep £20K in reserve. This gives me £200K on margin. I plan to place trades of 5,10,15,20K depending on the risk of the share. I plan to limit my losses to 1% of the trade (max. £200) per trade.

So far, I have placed a few trades and made £500 overall in a month with a win to loss ratio of 60%. I normally sell after a 1 to 2 % profit. Of the £200K I've only had a maximum of £30K in a trade at any one time. Now I'm in profit (while still learning) but £500 a month is not good enough.

QUESTION 2: What should I do? Should I increase the amount of the trades so that I make a better absolute profit? Should I be aiming to place the same value of trades but increase the EXIT level for a bigger percentage gain?

In my limited trading experience, I felt I have cut profits too soon and made my stops too tight. And my timeframe is too short. Typically, I have held the share for 3 days or less.

What do you think about that? What do you guys typically do?
King Tut is offline   Reply With Quote
Old Feb 13, 2006, 2:34pm   #2
Joined Dec 2004
My first comment is that as a new trader you should be quite happy to be profitable at this stage. It is often the case that newbies take a while just to become break-even traders, so perhaps you're a bit ahead of the game there.

My second comment is that it's really hard to give you an assessment on what you need to do better without having a better idea of your general strategy. Do you have a fully developed trading plan?
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