franktrader
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can any professional answer me how to determine the loss to be stopped in a trading session?
your reply will be very much appreciated.
Frank
your reply will be very much appreciated.
Frank
day trading
- Thread starter franktrader
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PokerBrat
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Your overall risk on a trade should be between 1% and 2% of your capital, depending on your risk appetite and how important that capital is to you.
For example, if you put £100 into a spreadbetting account and they give you a £100 bonus, that £200 isn't going to break the bank, so you might want to take more risk on each trade. But if you have put your £10k life savings into it, you will be more risk averse.
As for a daily stop loss, I tend to use 3 losing trades in a row. That will be about 5% loss on the day (I trade 1.5%) which is more than enough for me. I also find that my psychology changes when I hit a few losers in a row and I start chasing losses. And I know to my cost from playing Poker that chasing losses only causes more losses.
You need to find your own comfort zone to decide these things, and it takes a little soul searching to uncover how you react to certain situations. We have a saying in poker that the most difficult opponent at your table is sitting in your seat (ie, it's you) and it is no different in trading.
Think about your appetite for risk, how you respond to losses and what your overall goals are for trading. Then you can develop your trading plan around this.
For example, if you put £100 into a spreadbetting account and they give you a £100 bonus, that £200 isn't going to break the bank, so you might want to take more risk on each trade. But if you have put your £10k life savings into it, you will be more risk averse.
As for a daily stop loss, I tend to use 3 losing trades in a row. That will be about 5% loss on the day (I trade 1.5%) which is more than enough for me. I also find that my psychology changes when I hit a few losers in a row and I start chasing losses. And I know to my cost from playing Poker that chasing losses only causes more losses.
You need to find your own comfort zone to decide these things, and it takes a little soul searching to uncover how you react to certain situations. We have a saying in poker that the most difficult opponent at your table is sitting in your seat (ie, it's you) and it is no different in trading.
Think about your appetite for risk, how you respond to losses and what your overall goals are for trading. Then you can develop your trading plan around this.
luckyd1976
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Impossible question to answer. All personal preferences and market traded.
Futures, FX, Equities, Options, etc...
