Was it a joke? Then how do they analyse their risk before entering a position?
Mate, I don't know about all pro traders I am talking about the prop traders I know. They don't really analyse their risk. At least not in the way it means to a lot of you reading this. The newer guys have a max stop out limit for the day and usually keep trading until its hit. The more experienced probably just know when to pack it in for the day. I doubt any of them could tell you how much they are going to lose in a
specific trade. Not before they get in and not with any degree of real accuracy. They get in when it looks right and get out when it looks wrong - they probably have an idea of where they are going to get out if it goes against them although sometimes this is adjusted on the fly and they might actually average a bit or do other things that the majority considers bad practice.
This is part of the reason I didn't fit in at my firm. Not the whole reason just part of it. I learnt to do things a specific way in this game and part of the risk management I read about and learnt and used was to manage risk by allocating x percentage of your account and then dividing that figure by your stop to work out your lot size. At my firm some of the traders would take the p*ss out of me and say I had no balls etc (probably still do) but fact of the matter is, I would have a specific stop in mind and if I had, for arguments sake, a 40 pip stop in the Euro future, I would say, well that's going to cost me £360 per 1 lot that I trade. So I do a 2 lot and its a loser I get taken for £720. With people being put back on the sim for dropping £2k you can see that if I hit a 2 lot and it went wrong, I've pretty much done 50% of my "allowance" before its sim time. Or at least that's the way I felt - that trading 2's or more I was only ever 1 or 2 losers away from another couple of months on the sim. For the scalpers there that were taking small losers of a few ticks on a 3 or 4 well then they could afford to go on much longer than me before it was back on the dreaded sim
I actually was told by someone there once that fixed percentage risk was "b******". And I was once asked if I ever averaged by a big trader. When I said no he looked at me like I was a complete c*nt. As far as they were concerned, it was grow some balls, crack a 3 or 4 (or 10
) and if you do £1,000 or more on a trade...well....we'll tell you when you're out the door. Not the way I wanted to approach my career. That's just me.
