- 2-3 % Risk for TDA account on a swing/position trade
- 10-15% Risk for CT account and Penny stocks
- For both accounts: a Risk:Reward ratio of 1:3 or better
- No trades for more than 40% of entire TDA account or 30 % of CT account
- Protect my Principle
- Sit out if market is indecisive or against me via: VIX/TICK/TRIN
- Make sure there is no expected news while you are in a position: ie earnings, unemployment, quadruple witching, etc
- Trade to trade well, not to make money
- Don’t short stocks in uptrends or go long on stocks in downtrends. High probability plays FTW
- Take all/partial profits when: the stock waffles, nears resistance or reaches intended target
- Compare stock to its industry, sector or some benchmark index
(Questions from Trade Your Way To Financial Freedom)How much time during the day do you have to devote to trading?
Currently I have the entire trading day to trade. If I get a job I will need to become more familiar with setting conditional trades et al. I am looking at finding a potential evening job which will allow for me to trade during the day.When you are trading, how many distractions can you expect to have?
People contacting me on the cell phone during trading hours and me surfing the internet randomly are my two main concerns. Both happen fairly infrequently though.How much time do you expect to devote to developing your trading system, to doing your personal psychological work, and to working on your business plan for trading?
It is my new job. I wake up and watch the markets until close and then go to the library and study.What are your computer skills? What skills do you need before you begin this trading venture?
I can read the manual that accompanies the software... I don't believe unique computer skills are required to become a successful trader.What do you know about statistics?
Nothing. I haven't seen a correlation with statistics and trading to the point that I want to learn Statistics anytime soon. I have enough information directly involving trading to worry about.How would you rate your market knowledge?
Slowly increasing. Initially it was information overload and I was learning a little about everything but not grasping concepts well enough. Now I am starting to learn more concentrated information and applying it to ensure I understand. I still have a lot to learn before I am confident in speculating on the market with any type of conviction.What are your psychological strengths and weaknesses especially in terms of trading system development?
I have a confident persistence in life. I do get put off eventually but for the most part, I believe that I am not easily deterred. I like to theorize already so I am up for testing ideas and hypotheses for an efficient trading system. On the negative side, I have been guilty of procrastination when it comes to back-testing or learning certain aspects but I am working on that.How about your strengths and weaknesses in terms of personal discipline?
I believe I am very disciplined and won't take trading personally. I understand that there will be hot and cold streaks alike. However, I can see myself potentially overtrading in the beginning or even making trades in haste instead of doing the pertinent DD based on my paper trading account so I need to nip that in the bud.Do you tend to get compulsive (that is, do you get caught up in the excitement of trading), do you have personal conflicts (that is, do you have a history of conflicts in your family life, at your job, or during past trading experiences), or do you have any emotional issues that constantly crop up, such as fear or anger?
I remember watching the 1 minute charts for like 30 mins straight on my first trade. I like to think I don't obsess like I used to but I need more experience in trading to determine any traits or conflicts that need to be resolved.Based on your personal inventory, what do you need to learn, accomplish, or solve prior to beginning trading? How will you do that?
- Create a more mentally stimulating workspace environment
- Scans and DD nightly. The market's close does not signify 'knock-off time'
- Gain more experience trading with actual money and then reevaluate objectives and tradings traits
- Stop running away from concepts or techniques that look to be time-consuming or difficult to learn.