Day Trading Stocks & Futures

rjshem

Well-Known Member
what is proper money management .. any links / videos to explain the same with live example ? .. heard it a lot but not sure what it is .. :)
raj232 ur a pretty experienced guy so u know what it means :). think i have said enough about it in a lot of my posts and thers a lot written on it here as well(Can check STs post on it hes written it beautifully) .here is one gem of it.

Trade 1% of your trading capital on each trade. Increase the % only after you reach 50 % profit on your trading capital....This should take about 3 months. Then at the end of 3 months devide the profits equally between trading capital and risk capital.....continue trading 1 % of your trading capital.....and trade 4-5 % of your risk capital......let this continue for 100 % profit....then repeat the same step.....

Let us take an example...say your Initial trading capital is Rs 5 Lacs......you make 2.5 L profits devide that 50:50 ...so trading capital now becomes 5+1.25 =6.25 L and your risk capital is 1.25 L now on each trade you take 1 % of 6.25 L plus 5% of 1.25 L = 6250 +6250 = 12,500 on each trade......continue this till your trading capital + Risk capital becomes 15 L ....then same steps.....

If you find 5 % too large, then go for 3-4 % of risk capital but this compounding will increase your trading capital exponentially without taking undue risk with your trading capital which goes on increasing continuously.
 
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raj232 ur a pretty experienced guy so u know what it means :). think i have said enough about it in a lot of my posts and thers a lot written on it here as well(Can check STs post on it hes written it beautifully) .
In the spirit of the same conversation...Do you recommend changing the rules in certain circumstances. e.g. on a day you are not making profits, do you advise reducing size or may be something like size reduction on re-entering a trade which initially went against you etc.?

Also can you throw some light on MM especially during adds. Sometimes pyramiding blows up on one's face big time but it also allows entry with a smaller size which is necessary sometimes
 
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rjshem

Well-Known Member
In the spirit of the same conversation...Do you recommend changing the rules in certain circumstances. e.g. on a day you are not making profits, do you advise reducing size or may be something like size reduction on re-entering a trade which initially went against you etc.?
for me no risk needs to be constant reducing risk after a couple of losses will lead to playing catchup as ur profits lessen compared to ur loss .. u should think about reducing it only if prolonged period of losses taking your drawdown below 10% of your capital..u should have a daily loss limit instead and stop trading for the day if u hit that limit.
 

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