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Monthly Archives: January 2011
What is your trading expectancy?
Expectancy is basically how much a trader can expect to profit or lose on a trade based on past performance. Successful traders have a high positive expectancy. Continue reading
Trading is counter intuitive
Some recent studies found that traumatic events are burned in our memories when there is a large amount of adrenaline in the human body. And we humans release adrenaline when we are scared or angy. Fear and anger are feelings that are also present when trading because we put our capital and our egos at risk. Continue reading
Posted in General Info, Trade Analysis, What to Write in a Journal
Tagged fear, futures, journaling, stocks, trading
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What is at Risk?
The objective in trading is to make money. But capital preservation is really what keeps a good trader in the game. Quantifying the maximum potential loss before entering a trade is critical. A good rule of thumb is to risk at most 2 % of the total trading capital in any given trade, but a trader often takes into account margin and minimum capital requirements. The idea is that a down turn in the market won’t take the trader out of the game.
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Posted in Risk Management, Trade Entries, Trade Planning
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