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BertAnsink t1_j6b2uy4 wrote

Around 2-3% total portfolio value.

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And size the position so that your SL is not likely to be hit in one day.

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If you have lost on your trade, it obviously means that you can loose next on next trade as SL will be 2% of your new portfolio size.

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2-3% seems low but think of this. If you loose 25% of your portfolio value you need to make 33% to come back to break even. Loose 50% and you need to make 100%. Loose 75% and you need to make 400%.

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Lack of risk managment is why people don't tend to recover from the inmense losses posted here.

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United-Display-386 OP t1_j6b3lj8 wrote

I should make clearer question “ How many % do set up for cut loss/ transaction”😲. ”

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BertAnsink t1_j6b5yz0 wrote

Yes usually 2-3% of total portfolio value.

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I usually take ATR(9) as a guide for how far away the SL needs to be.

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So say I am trading ES futures with $50.000 in my account. I would put the stop at $1000. ATR(9) for last trading day is 60 points. For ES futures it's $50 per point. So 1x future with a 60 point drop would give -$3000. In this case I would shift to MES that do $5 per point, ie 4x MES with a 60 point loss will give -$1200. Set stop at 50 points in that case.

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There is more to all this since I often trade futures against shares. Ie I own the shares and sell futures short. In this case I can short more futures since I have long shares that cover the loss if I am wrong.

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On options I usually sell them, either puts at a point where I think the stock is low and has high IV or calls after I think we have reached a peak. Collecting the premiums gives you more opportunities than pure directional betting where it's simply win or loss.

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I also try to diversify into uncorrelated assets where opportunities arise. Ie last year I have traded a lot of WTI futures spreads which was good business. The market has stabilized for now but I am looking at QG (Natgas) since that went down the toilet over last month.

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I keep a daily excel sheet which calculates total portfolio volatility so I have a track of Value at Risk for a given day.

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United-Display-386 OP t1_j6b6m7r wrote

is often the %Win > than %losses At the end of the month . I know I need to train my mental health to accept the lost day . Still chicken 😅

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Express-Rice-6415 t1_j6flele wrote

I think its also the lack of understanding of how compounding small percentages on on a steadyish avarage can make you filthy rich, but this is wsb we here for a good time not a long time :D

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