You could learn this the hard way or the easy way


Here’s the cold, brutal truth that most traders ignore…

Not everyone is going to be successful from trading. In fact, I read an article on Forbes the other day quoting…

“The success rate for day traders is estimated to be around only 10%”

Why?

There are a ton of reasons. From my 10+ years of trading, I can tell you that yes, finding good setups is a great skill to have…

Having a good strategy is important…

But what can make all the difference – what makes or breaks a trader – is the way they handle risk.

That’s why I’ve spent years fine-tuning these risk management principles I strongly follow. 

People in my community (the Wall Street Octagon) that watch me trade have seen me apply these in real-time – including the special occasions that I have to break my rules (which I don’t recommend anyone does). 

Every day, I enter the market with two goals in mind — growing my account and creating a constant income stream from directional aggressive plays. 

Having this at the back of my mind is what guides me when deciding which strategies to use on the setups I find.

There are several important factors I to take into consideration when deciding which setups fit my risk parameters.

It doesn’t matter what the trade is, I always go through this checklist to determine my aggression level;

  • My technical analysis
  • My estimation of the level of strength of the setup
  • The overall market conditions
  • Risk allowed per trade – while considering my overall account size
  • The target I have for my account growth 

Here’s an important point to note: when assessing the relative risk of a strategy, I always teach my students to always keep in mind the position size they use when placing a trade – which should also reflect on your account size.

Risk Management Summary

Trading Style: Aggressive Swing Trader – Directional + Income

Account Goals: Like I said earlier, achieving aggressive growth is my priority, so I target a 104% gain on my account every year. For others, this number could be a bit higher.

Typically, I’ll split this to a 2% growth per week – and I’m always adjusting risk and position size each week depending on my account size.

My focus is spotting moments where I can best leverage options to significantly grow my account, while also paying myself. 

Overall Acceptable/Recommended Account Risk: When it comes to position sizing, I strongly believe in and follow these principles:

  • As an experienced/aggressive trader, as a general rule I allocate no more than 20% of my account on any one trade. 
  • At any given time, I try to have no more than 50% of my account at risk, which means sitting on a lot of cash.
  • I don’t let my emotions get in the way, that’s why I always try to be as realistic as possible! I avoid having more positions than I can actually handle.
  • Instead of spreading myself thin on a large variety of setups, what I focus on instead is trading the positions I have well. I prefer not to have more than about 8 positions at a time. 


Another important point to keep in mind: The market is constantly changing – new opportunities and catalysts are always popping up. So every now and then, I might break my own risk parameters (in the right situation, of course). Although this isn’t something I would recommend that others do.

Strategy Use + Risk Taken Per Setup: For every trade, my position size and strategy usually depends on the strength of the setup – while keeping other risk parameters in mind

Methodology: I like to wait for the perfect moment to pull the trigger on my favorite setups. But before that happens, I prefer to minimize and spread my risk during lower probability plays. If you follow me, you’ve most likely seen me throw on a 200-300 lot.







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