what should be money management rules for the day trading ?

#1
Hi there
after going thuoru losing streak twice since i started trading i guess that my reson for failure is money managment.

so my querry to siniors here is,

1] what is the money man agment rulse one should foloow in daytrading?

2] what is money mangement rulse your following now?


warm regards in advance
Ali
 

Class

Active Member
#2
Hi Ali,
Sorry to hear you've gone through a losing streak, but good to hear you are looking into the cause to make progress.

I'm not daytrading but would also be interested in the answer, as I'm sure margin and leverage would come into it.

I have heard that trading is 70% psychology, 20% money management and 10% how you trade. If you are 'guessing' that the problem is money management you may be missing a more important reason.

Suggest that you review previous trades, successes and losing streak and see what you did or how you thought differently. Perhaps over trading, guessing, not having firm plan, not following plan etc etc.

What do you think you did wrong money management wise?

Hope this is of some help at least until some money management tips from the experts. All the best,
 

AW10

Well-Known Member
#3
Ali, focus of money mgmt is - SURVIVAL. As a trader, we can survive to fight the battle on next day, only when we control the amount that we are going to loose.
We got to set the rules and follow.. (if we don't have the rules, then there is no question of following them). It is not just matter of knowing this number in our head.. but I prefer to keep it in writing so where and also refer to them regularly and monitor them during the market hours.

In my trading, I have various loss limits as % of my trading account size.. i.e.

- Risk per trade 1%,
- Risk per day - 4%,
- Risk per Week - 8%,
- Risk per month - 10%.

At the start of month I calculate these number and then they are reset only on next month begining.

You can have different % here. But higher the number, difficult it gets to recover the loss. In my approach even if I am down 10% in a month, I can easily recover in next month.. but if I am down 30% in a month (i.e from 100, i have come down to 70), then I will need a RoR of 45 to 50% to recover.. which is not practical in a month. So, I keep fighting for 2/3 months just to get back my loss.. Not a good trading loop where I want to be in.

The Must rule for me is to stop trading for as soon as any of the loss limit is hit.
If I have 4 loosing trades in a day, my trading day is over. If I have 1 4% lossing day, and next day again I loose 4 trades, I am on holiday for a week. No more trading, no fighting with mkt to recover my loss.. Psychological impact of losses on our decision making is very different topic.

Plz read something more on this topic and feel free to raise your doubt/query.

Hope this helps.
Happy Trading
 
#4
Hi there
after going thuoru losing streak twice since i started trading i guess that my reson for failure is money managment.

so my querry to siniors here is,

1] what is the money man agment rulse one should foloow in daytrading?

2] what is money mangement rulse your following now?


warm regards in advance
Ali
Hello Ali,

Sorry to hear that you are going through a loosing streak at present but every trader goes through it periodically....so no need to feel bad....winning and loosing is a part of a game called trading....as long as you keep your winnings large and loosings small you are going to be a winner. And this is where MM comes into play..to restrict your losses when trade goes against you.

I follow following MM rules in my trading :

1) The initial risk in any trade should not exceed 1% of the trading capital...with adds it should not exceed 1.5 %

2) Max risk at any point on all open daytrading positions should not exceed 3%

I will also suggest the following to follow in the loosing streak :

1) Trade small till you get on the winning streak and get back your confidence because loosing streak not only dents your trading account but it dents your confidence,clarity of thoughts,judgement etc

2) You must learn to hold on to your positions when they are going in your favour...also add to your profitable positions...this is the key to trading profits....no amount of brilliant thinking will do that for you ....it is your adding and sitting with profitable positions which will make enough money in your succesful trades much more than your losses in loosing trades....and this applies to daytrading as well you can have 2-3 profitable adds during the day.

3) Wait for proper set ups to develop before you take a trade...this is particularly necessary in loosing streaks..

I am sure you will get out of this loosing streak and get on to rocking streak soon. Look at it from positive perspective that after this loosing streak,the winning period is round the corner....so cheer up and go for it...

Best wishes,

Smart_trade
 

NOMINDTR

Well-Known Member
#5
Hi there
after going thuoru losing streak twice since i started trading i guess that my reson for failure is money managment.

so my querry to siniors here is,

1] what is the money man agment rulse one should foloow in daytrading?

2] what is money mangement rulse your following now?


warm regards in advance
Ali
It is obvious that if you ask questions about money management instead of techniques, then you need just some fine tuning, attitude building to make things up.

Calculate Risk and Reward before entering every trade and write it down on paper. This would help you to define clear, technical stops/targets and most of the time, I have changed my mind when I wrote Risk/Reward ratio on paper.

Try to preserve what you have earned, does not matter how little they are, on day to day basis

Keep survival alone as your trading goal, you will be doing great money management. Once you have seasoned, you will automatically trade for big profits. Till that time comes, don't push yourself. Be slow and just learn to survive.

Happy Trading
 

anuragmunjal

Well-Known Member
#6
hi..
I feel at times we tend to make simple things complicated. when we speak of day trading, why think in terms of a/c size. when u r trading, u r either trading some system or ur intution. either way, trade so small initially that even a string of losses does not upset u financially or emotionally. once u r confidant that on balance u r taking money frm the market, keep on increasing ur positions steadly. we all know what the power of compounding can do. after a winning streak if u again encounter a string of losses, start cutting back on ur position size. this way u would be able to keep a part of the money that u have made and would also be able to rationally analyze ur mistakes. I have personally gone down frm doing an average turnover of 20 cr a day to 2cr a day in a weeks' time and going totally flat the next week.
hope this helps.

regards

Anurag
 
#7
hi there,
I just noticed some thing here in traderji which i wanted to point out that, there are 120 views of my thread but, only few of them wrote some thing which is vearry important for trading. some thing vearry interesting :cool:

By the way i was looking forward to read from siniour traders who made there mark in intraday trading and what was and is there money managgment thougth's.

one thing is commen in my lossing streak. i sarted to experiment with 1000 rupees and earned 500 rupees and then losing streak started.

in fist loosing streak i lost ven principal amount, e.i. 800
and in secend till now i lost 600.

can you guy's find any thing in your owen trading experience whioch can help me?

i am looking forward to read you

warm regards
Ali
 

Class

Active Member
#8
Hi Ali,
Noticed you have no 'thanked' posts, so I'm the first to give you a 'thanks'! :thumb:

Also I agree with you, particularly for newbies introductions there are lots of views but no one gives them some help and advice.

I'm not entirely sure of the mechanics of daytrading and if you use leverage and margin, but if not, 1k seems very little to be trading with. I would think that brokerage, spread & taxes will be a significant percentage of the trade.

If you back trade all your trades on paper with a larger amount of money will you still have had a losing streak?

BTW - many of the seniors have put their trading and money management strategies here on the forum. You just need to search or ask someone who knows which thread to view.

All the best,
 
Last edited:

sudoku1

Well-Known Member
#9
Hi there
after going thuoru losing streak twice since i started trading i guess that my reson for failure is money managment.

so my querry to siniors here is,

1] what is the money man agment rulse one should foloow in daytrading?

2] what is money mangement rulse your following now?


warm regards in advance
Ali
the MOST IMP OF ALL > DISCIPLINE !;)
 

AW10

Well-Known Member
#10
hi there,
I just noticed some thing here in traderji which i wanted to point out that, there are 120 views of my thread but, only few of them wrote some thing which is vearry important for trading. some thing vearry interesting :cool:

By the way i was looking forward to read from siniour traders who made there mark in intraday trading and what was and is there money managgment thougth's.

one thing is commen in my lossing streak. i sarted to experiment with 1000 rupees and earned 500 rupees and then losing streak started.

in fist loosing streak i lost ven principal amount, e.i. 800
and in secend till now i lost 600.

can you guy's find any thing in your owen trading experience whioch can help me?

i am looking forward to read you

warm regards
Ali
Ali, I am just guessing, (hope I am wrong), that ur startegy is not correct.
Draw very clear rules .. (u can chk out first few posts of my NR7 thread where I have posted sample rules).. Lets accept the fact, as human being, none of us are wired to be successful trading. To succeed in Trading, we got to do things very differently. And clear cut rules does help a lot..

Once u have a set of rules (don't worry, even if they are not perfect, or they are wrong.. just start somewhere),, then plz backtest them on last the chart of 1 stock first and then on few more stocks.. If you find that it these sets of rules make money on paper, then only u can expect them to work with real moeny in future.. Else u are kidding yourself.
Paper trading /backtesting is similar to what doctors / we as driver/ pilot/ fighter plan pilot all go thru in their simulated training.. Once they reach a level of success then only they are given the real stuff.. Unfortunately, trading is so easy that we all feel no need of all this..

Happy Trading
 

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