Hello, Per my risk management rules so far, I can only risk max $200 per trade trading the CL, however today, the setups are clear, but the risk far exceeds my risk tolerance rules. I missed alot of good money by not increasing my risk to like $300. So, I just pass on the trade. But its pretty tempting to not jump in and take the increasing my risk just for today, but I will be pissed starring at the big loss afterwards. And this leads to other mistakes and emotional bad day. Is this the part of risk management trading, I often read and hear about regarding protecting capital, if the risk too big, I have two choices decrease position size, or sit on hands? If so, at least I know I am doing the right thing. Thank you,
If you'd be mad about losing $300 (but are ok losing $200), stay at $200. Every risk management strategy will miss some trades that could have been winners.
Thanks zoned_post_meridiem, Just making sure I was on the right track by getting other traders opinion on the risk management, which is something I am trying to get much better with. Correct me if I am wrong, but I believe this is where discipline in trading comes in at. Doing the right thing per the risk rules.
I know the opportunity seems juicy... but you don't have to make money today. What you need to do is to not lose a lot today (or any day).. and this environment is ripe with the opportunity to lose big.... or win big. Like I said, "red or black". (My preferred play has always been to take a big position... so that if I get it right, I make a good amount... but only when I can control the risk. That's what TA is all about. With this volatility, there is no/little "risk control" other than hope... which seems to have a way of not showing up when you need it most. JMV)
Thanks Scataphagos, You right! And I know myself. If i take the position of a risk outside my tolerance, I will go into emotional let's get it back, bang the desk, the strategy do not work, why i did that, fill in the mistake column of the journal, another stupid mistake, now lets go rush into another trade roller coaster. Next thing you know its 1pm and I am starring at over trading of nearly 13 trades and some big losses. It all looks juicy.
It only looks juicy if you have a discipline problem. Sure, there's chaos because of Corona-Virus, Yield lows never seen before plus the Oil problem after OPEC deal failure...it all looks juicy. This isn't a Zombie apocalypse. wrbtrader
Uncle Buffett: 1. Be greedy when others are fearful. 2. You wait for a fat pitch, when it comes, don't bunt. But easier said than done. If you can do that, you belong to the 0.1%.
If the current market conditions don't fit with your strategy and risk management, just stay out ... Investing/trading is not only about the money you make but also about the money you don't lose.