Pro traders say risk 1-2 % per trade. I am wondering what the allowed daily loss of account percentage commonly is? Eg if you risk 2% per trade and lost your first three trades you would be down 6% for tha day. would you then quit?
|
=>Click Here to check out Leo Trader Pro Now and Lock in your HUGE Discount |
It all depends on how much you are willing/able to risk/lose. Of course there is a general rule of thumb, but it varies person to person. You can find lots of good information at http://www.forexmarketsuccess.com
Hopefully that helps you!
Yes, you would quit for the day. Three losers in a row is trying to tell you that something is not right, something is not working, and it may not be obvious at the moment. Come back and play another day when the volume is better or the trend is better or there are better entry points with less risk.
These are just rules of thumb, not rules. There are literally hundreds of them out there, a few of which someone has adopted as their own personal rules.
But you are creating a written plan. A plan is composed of two primary parts:
1.The blueprint is a preliminary action plan developed before trading begins. Review the plan every few weeks. It is a living document that evolves over time. I always revise my plan for the summer trading season since summertime market conditions call for different strategies.
2.The Journal is a day-to-day microadjustment of the blueprint. This is the document that requires you to adhere to your plan. Emotional aspects of trading on a daily basis are written in here. Questions such as
•Did I follow my blueprint today?
•Did I maintain discipline?
•Did I do the research required?
•Did I recognize support and resistance levels through volume?
•Was my methodology correct?
Ask these questions and answer in your journal. These represent intangible issues that technology cannot capture through a database. If you did the right thing and still lost money, make a note of that. If you did the wrong thing, make a note of that. Other questions should also be answered:
•What was my strategy (earnings play, split, momentum, etc.)?
•Did I exit on fear or logic?
•Did I do the right thing, and do I feel good about my decision?
•Would I make the same trade again in the same situation?
•Did I have confirming indicators when entering the trade?
•Was my discipline followed? Why or why not?
Writing stimulates thought. When you put your plan on paper, it somehow becomes more real than it is when it is just in your mind. Things may seem fine, but in black and white it seems unrealistic or improbable. Nothing is more expensive to a trader than trying to make something happen that is unrealistic.
Another important reason for the plan: you cannot deny it. If the plan says not to hold postions overnight, and you do anyway, you realize you have violated your own discipline. When the plan is only in your mind, it is easy to rationalize it away, and your discipline erodes like the sands of a beach.
The plan is a way to keep score, rather than just a P&L. Many more factors play into the process than just money. Emotions, accountability, responsibility, focus, and creative thought all get brought into the dynamics of trading versus a one-dimensional fixation on monetary gain.
Writing down what these motivations and components are for you while tracking your adherence to them each day, through your journal, increases exponentially the likelihood that you will achieve your desired result.
The rules are ever changing
Get a mentor.
There are no silver bullets in this business. No easy way to make money in trading.
Develop conviction.
The market has little room for arrogance or ego.
Avoid holding positions over weekends.
Scared money never wins.
Get the knowledge.
Know your strategy.
Use Level II as an indicator, not as an all-inclusive decision support tool.
Read the levels, not the ticks.
Know your order routes.
Gaps tend to close.
Supply and demand determine price.
Never allow your order flow to be sold. This is routing orders to a wholesaling market maker instead of routing them directly to the market through systems such as the SOES, SelectNet, a variety of ECN’s for NASDAQ issues, or through SuperDot for listed stocks.
Don’t wait for certainty. Especially for day traders, think of stocks as either “thick” or “thin.” Thick is highly liquid, and both relate to price levels of liquidity or lack thereof.
Let market indications lead you in and out of trades.
Be multidimensional. Mixed styles that includes day trades and swing trades.
Size the trade. Take into account volatility, liquidity, daily range, trend patterns, and time horizons.
Amateurs control the open; professionals control the close. Watch the open in the NASDAQ, don’t trade it. Wait 15 minutes.
Trade liquid stocks. Screen criteria for stock selection.
•Daily volume of at least 500,000 shares per day.
•Sufficient intraday price volatility. Look at beta.
•Correlation with major indices and sector leaders.
•Minimum of five active major market makers.
•Reliable technical indicators available.
•Strong book on at least two ECN’s.
•Tracked by analysts.
•News easily available.
Avoid chaotic stocks. Low-price penny stocks (less than $5).
Match volume to time. Fast markets, low liquidity spell = trouble.
Specialize.
Trade stocks with good correlation. Between stocks and major indices and sector leaders, provides relative indic
I have a few valuable forex trading web sites, in particular some of them relate to the issues of avoiding scams in this field. Many people have lost their money to get this information and you can get it without any damages to your budget. But I would not like sharing this information here lest it does not look like advertising these web sites. It would be better, if I send you these websites by email. So my email is forexsmarty@yahoo.com. If you are really interested in this information, I will be always glad to help you.