👉 Trade with our Sponsor Broker: Trade Nation www.financial-spread-betting.com/ccount/click.php?id=95 Trade sensibly! 81.7% of retail investors lose money. 👉 We are seeking more contributors who can produce great video educational content about trading for our channel. If you think you have what it takes please get in touch by sending a message to traderATfinancial-spread-betting.com (remove the AT and substitute by @). 👉 It seems a lot of our viewers are non-subscribers. Make sure to subscribe to our youtube channel as we upload regular videos! If you hit the “Bell” icon (🔔) you will receive a notification on youtube every time that we upload a video on our channel. Bell icon hitters are super fans of our channel 🥰
How have I skipped this video all this whole time. This is the best thing I’ve heard so far on risk management. Risk per trade has cost me so much pain in a short time. Last week I gave back 7% profits in 3 days because I was risking 2% per trade. Thank you so much ❤ I’m sure I’ll be a more efficient trader and investor because of this and I’ll start to see consistent growth with no windfall losses. This is my holy grail in trading
This THE best info on risk I’ve ever read or heard. Well done. By first deciding on the amount you’re willing to risk in a time zone you can protect your emotions and pride, etc. which is more important than the money if you want to stay in the game.
Sweet spot video - risk management (and psychology!!) is FAR more important than the technicals/charts/setups etc. Personally, I day trade (or scalp) a) USD pairs during London/NY overlap, than go do something else and come back to scalp Gold when Tokyo joins Sydney. NEVER EVER do I risk more than 0,5%/trade. On (very rare) days I am down 2%: I am OUT. No more screen time unless it is Netflix. Days I am up 2%? I save/SL 1% and continue trading at 50% normal risk (= 0.25%/trade). Lucky day and up 3%? I save 2% and keep going with 50% normal risk. BAD DAY? 4 losers in a row drawing down 2% of equity?? -> walk my dogs, go to the gym, visit friends, paint a wall, whatever...but do NOT fire up your trade station again. Next day; before I even allow myself to trade, I MUST be able to explain why I deviated from protocol - because 4 losers in a row, in a DAY, is very unusual.
Risk for me is dependant on market type, my trading style and my trading psychology. Any one of these factors changing will mean adjustment of the risk for that individual trade. In general i do have a risk of 0.5% due to trading intraday, however, this can rise if i trade a swing with a wider stop or decrease if scalping.
Great perspective on long term timeframe risk management. I'm shooting for 3 trades per week and am risking 2%. I multiply that out to 4 loosing weeks, that's 24%. As a worse case scenario, I'm ok with that.
Good content, I do this too, I risk 1-2% a day, depending on the market volatility. I do 4 trades a day so I risk .25%-.5% per trade so I don't lose too much for the day if I have 4 loses in a row.
I only risk what I'm comfortable with. When a trade goes my way I bring up my stop by increments, keeping my potential loss small. And I try to cut my losers quickly too, give them time to run but if they don't work out I cut them. Thanks Mark, another good video 👍
Backtest your system and see the losses you can see as per different quantity you trade with. Will give you an idea of how much you could lose or gain and adjust accordingly
As a relatively new trader, I risk small amounts as I only used demo for a couple of weeks and went straight in trading tiny amounts for my learning curve, GBP not USD
actually if you risk any amount less than 99% of your portofolio on each trade, its impossible to wipe your account no matter how long your drawdown periodes are, but i couldn't say the same about your emotion though. i think losing money isnt that bad if you dont lose consistency and your will to trade
Legend that was great info, broke it down very simply..... I recked myself in the beginning by putting too much risk on the table..... must admit when the winners run on high risk it was beautiful. But I'm taming the beast no more wild behaviour lol
Very powerful video and confirms that for me I was still trading too big even though I thought I was trading small. On a 10 k account my lot size will only be 0.01. If Iam managing a 50 k account then my lot size will then be 0.05 Great video when I paying more attention to risk management then the profits took care of itself
Yes i do this as well, risk per day and work backwards If you're longer time frame you should still keep risk 3% or under unless you have crazy +EV you can rely on, which could be possible on longer time frames e.g. 80%+ strike rate @ 1/1 or better
So the conclusion is, its not worth the time spent as a day trader, if you have less than 150 K USD to start with... The small amount that you can risk per day is so small...
It's risk, not the position size. Look up position sizing to understand this. You can have a position of one million USD yet only risk $200. It all depends on your stop distance.
I have some difficulty getting this. If say a day trader takes one trade per day at 1% risk. And a swing trader takes one per week at 1% as well, and the strategies have the same expectancy and R:R, and are executed the same, the results will be the same, good or bad, albeit over substantially different timeframes. (I ignore scaling options in swing trades for the moment) Under the above circumstances, I still do not seem the point of a diligent day trader dialing down his per trade risk. What am I missing?
I keep thinking this every time I see people talking about risk I was going to do a video on it! It just doesn't add up. Kind of like saying the recommended sugar intake is X grams, but not giving the time horizon over which that's true. Looking at how correlated trades are is also important. If you're risking 1% of your account on 5 separate oil companies for example or long 5 dollar base pairs then you aren't necessarily managing risk. Fantastic video!
i've thought about this before. i disagree somewhat. my intuition is that the number of trades shouldn't matter. if you picked a lower risk per trade and a winning strategy, then you would want to do as many trades as possible in the shortest amount of time possible. the good thing about a higher number of trades and a lower risk per trade, is that it's statistically more reliable. with a winning strategy. i would have all my money in trades as long as it's spread out really well. making the most use of a strategy also ties into your other video, about how strategies eventually stop working. of course this intuition doesn't take into account that taking less trades gives you more time to reflect and make changes what i've also been wondering is, if there is some technical way to calculate how much someone should risk per trade given their "risk tolerance". hmm yes. i think i will look around to see what i can find about the techincal definition of "risk tolerance"
That's what I'm saying... surely if you have a winning strat then it doesn't matter whether you take the 10 trades per day or per year. If there is a chance of taking 10 losses in a row, then that would be the same within the year. Also, It would be very unlikely to take 50 losses in a row to be out in the 5 day week, but if that is possible, then that yearly trader would be out after 5 years done! Just because they spread it over 5 years, people think well they have time to change the strat, but anyone with 20 losses straight on the second day would surely reanalyse their strategy in the same way. I guess the main factor would be the traders psyche, can they handle a $2000 daily loss as would be "easier" to spread that; but if your a day trader, this should be accepted... to some degree... I guess another factor, which a lot of people forget to mention, is recalculating that 2% risk. I seen a lot of videos talk about percentage risk yet only calculate it at the start, assuming $10,000 would be 10% down after five 2% risk trades. But if you recalculate after every trade, this can easily be done with software such as MT4, then it wouldnt quite be 10% (very close tho). But with larger % risk it works out better. Something else worth considering
Seems this analogy is based on a day trader that has to trade a certain number a day. One day trade a day would make more sense when compared to swing trading.
I don't really understand why the time frame of my trades should affect my win rate! If I have a statistical win rate of let's say 60% over time...this should apply intraday as well as over a couple of months, shouldn't it? In other words: if I risk 2% per trade, it needs ~50 losing trades in a row to crash my account. With a statistical win rate of 60% this seems very unlikely. Why shouldn't this logic apply if I do these 50 trades in quick succession instead of spreading them over a couble of months? What am I missing?
I agree time should not be a factor. Otherwise you could argue that a swing trader, taking 20 trades a year, makes 400 trades in 20 yrs, should not be profitable over two decades with a 1 or 2 percent bet. Its illogical. In contrary the more trades over a shorter period of time should be more profitable.
I think it's about drawdown (so lose 50% of account then need to make 100% to get back to where you started). Also you don't have to have the losers all in a row. If you have 25 winners and 50 winners in any order, you are now down 50% (if risking fixed 2% of original account on each trade).
This is really good content and so true not thinking about how much I was risking per day was hurting me bad after getting up and than coming down fast trading to much on day it wasn't working...was just thinking about risk per trade
This video is a bit off for USA traders Someone with 10,000$ taking 10 trades a day can only trade 1,000$ 5 times per day if they are a cash account. If they were a Margin account then the PDT rule makes them only able to trade 3 times per week. Chances are a margin trader isn't going to risk more than 200$ on each of those trades if they are going all in 3 times a week. So cash account has a 500$ per week risk Margin account has a 600$ per week risk I realize that this video is likely from UK where Margin accounts don't have restrictions. Which means one could trade 10k 10 times per day.
I don't agree with what you said. If your strategy has an edge. The day trader that risk 2% a trade would be better than the longer swing trader since there are more trades thus it will be less randomness.
You guys are talking too much but not talking how to minimize probability of risk from occurring and how to minimize the impact. Reward/ risk is a wage term. It's not risk per trade or per unit time it should be overall risk on all trades. Where are tools to identify risks, how to minimize its probability from occurring and how we can minimize risk. if there is positive opportunity then how to maximize it from occurring and how to improve impact of positive risks.
So many useful information here. Who can be like the best and cheapest platform for day trading stocks for people living in UK? Which platform has got trades execution keyboard shortcuts for free? Fast execution time. Wide stocks access. No Pattern Day Trader limit for US stocks. Is it anyone like that?
@@ukspreadbetting But should I sell with a loss when the other side of my trade, the buyer, regards it as a profitable aquisition? Or should I rather wait for what the other one is aiming for, turning Day into Swing now and again?
You should have a plan of action before entering a trade. Turning a day trade into a long term trade doesn't sound like a great idea. But if you do so make sure to stick a stop to it - either in your mind or an actual one and don't deviate from it.
@@ukspreadbetting Ok. Sounds like a good idea. Like the having a plan and not deviating from it, especially NOT DEVIATING. Agree 100%. If u do, u also start messing up. Thanx 4 your answers. Keep up the good work 👍✌
If you lost 3k over 6 months as a day trader you might want to eeeeeh not day trade :p. Okay if your risk is not allowed to go to minus 3k in 6 months as a day trader, thats okay but if u have to put that rule in you probably allrdy know you are not a profitable trader. Head back to the simulator imho. I would call a rule in i'm not allowed to go minus x during the week or day. But 6 months? As a profitable day trader i would say I cant be below 0 in 6 monts. I should be high in profit. Take in account thats hundrends of trades depending on your strategy and pattern. On that amount of trades not having a decent profit is just well, back to the simulator :p. And start improving.
Your totally right, far better than risking per instant as you said 2% per trade a day with 10000 capital ( 5 trade lost your down 1000 a day...... AIE AIE AIE
Its illogical. So a swing trader will have to wait 20 yrs to reveal that his strategy was not sucessful? 20 trades a year x 20yrs = 400 trades. What will he do then? Adjust the strategy and trade another 20 yrs? 40 yrs in total... In that time span markets may well have changed. Either you have an edge for daytrading or you dont. Simple as that. Time is not a factor.
👉 Trade with our Sponsor Broker: Trade Nation www.financial-spread-betting.com/ccount/click.php?id=95 Trade sensibly! 81.7% of retail investors lose money.
👉 We are seeking more contributors who can produce great video educational content about trading for our channel. If you think you have what it takes please get in touch by sending a message to traderATfinancial-spread-betting.com (remove the AT and substitute by @).
👉 It seems a lot of our viewers are non-subscribers. Make sure to subscribe to our youtube channel as we upload regular videos! If you hit the “Bell” icon (🔔) you will receive a notification on youtube every time that we upload a video on our channel. Bell icon hitters are super fans of our channel 🥰
If you have 30 losing trades and no winners get a different job
How have I skipped this video all this whole time. This is the best thing I’ve heard so far on risk management. Risk per trade has cost me so much pain in a short time.
Last week I gave back 7% profits in 3 days because I was risking 2% per trade.
Thank you so much ❤
I’m sure I’ll be a more efficient trader and investor because of this and I’ll start to see consistent growth with no windfall losses.
This is my holy grail in trading
This THE best info on risk I’ve ever read or heard. Well done. By first deciding on the amount you’re willing to risk in a time zone you can protect your emotions and pride, etc. which is more important than the money if you want to stay in the game.
I learned that I can always click thumb up on Mark's videos even without start watching. No risk involved 🤣
Sweet spot video - risk management (and psychology!!) is FAR more important than the technicals/charts/setups etc.
Personally, I day trade (or scalp) a) USD pairs during London/NY overlap, than go do something else and come back to scalp Gold when Tokyo joins Sydney.
NEVER EVER do I risk more than 0,5%/trade. On (very rare) days I am down 2%: I am OUT. No more screen time unless it is Netflix. Days I am up 2%? I save/SL 1% and continue trading at 50% normal risk (= 0.25%/trade). Lucky day and up 3%? I save 2% and keep going with 50% normal risk. BAD DAY? 4 losers in a row drawing down 2% of equity?? -> walk my dogs, go to the gym, visit friends, paint a wall, whatever...but do NOT fire up your trade station again. Next day; before I even allow myself to trade, I MUST be able to explain why I deviated from protocol - because 4 losers in a row, in a DAY, is very unusual.
Risk for me is dependant on market type, my trading style and my trading psychology. Any one of these factors changing will mean adjustment of the risk for that individual trade.
In general i do have a risk of 0.5% due to trading intraday, however, this can rise if i trade a swing with a wider stop or decrease if scalping.
Definitely another way to look at it. Managing risk is the only way to survive in day trading!
Great perspective on long term timeframe risk management. I'm shooting for 3 trades per week and am risking 2%. I multiply that out to 4 loosing weeks, that's 24%. As a worse case scenario, I'm ok with that.
. Contrary it should be more profitable to make MORE trades per time unit. Think about it once again. If you have an edge...
Good content, I do this too, I risk 1-2% a day, depending on the market volatility. I do 4 trades a day so I risk .25%-.5% per trade so I don't lose too much for the day if I have 4 loses in a row.
You sound like you have no edge in the market
I only risk what I'm comfortable with. When a trade goes my way I bring up my stop by increments, keeping my potential loss small.
And I try to cut my losers quickly too, give them time to run but if they don't work out I cut them.
Thanks Mark, another good video 👍
Backtest your system and see the losses you can see as per different quantity you trade with. Will give you an idea of how much you could lose or gain and adjust accordingly
As a relatively new trader, I risk small amounts as I only used demo for a couple of weeks and went straight in trading tiny amounts for my learning curve, GBP not USD
actually if you risk any amount less than 99% of your portofolio on each trade, its impossible to wipe your account no matter how long your drawdown periodes are, but i couldn't say the same about your emotion though.
i think losing money isnt that bad if you dont lose consistency and your will to trade
Legend that was great info, broke it down very simply..... I recked myself in the beginning by putting too much risk on the table..... must admit when the winners run on high risk it was beautiful. But I'm taming the beast no more wild behaviour lol
Lovely video, I risk 5 percent per day. And I usually take one trade a day.
The answer is asymetric compounding after two trades you go back to risking your initial base rinse and repeat
Very powerful video and confirms that for me I was still trading too big even though I thought I was trading small. On a 10 k account my lot size will only be 0.01. If Iam managing a 50 k account then my lot size will then be 0.05 Great video when I paying more attention to risk management then the profits took care of itself
Excellent perspective. Looking at the big picture when road mapping risk.
Yes i do this as well, risk per day and work backwards
If you're longer time frame you should still keep risk 3% or under unless you have crazy +EV you can rely on, which could be possible on longer time frames e.g. 80%+ strike rate @ 1/1 or better
So the conclusion is, its not worth the time spent as a day trader, if you have less than 150 K USD to start with... The small amount that you can risk per day is so small...
It's risk, not the position size. Look up position sizing to understand this. You can have a position of one million USD yet only risk $200. It all depends on your stop distance.
This made me really understand risk % better. THANK YOU SO MUCH.
I have some difficulty getting this. If say a day trader takes one trade per day at 1% risk. And a swing trader takes one per week at 1% as well, and the strategies have the same expectancy and R:R, and are executed the same, the results will be the same, good or bad, albeit over substantially different timeframes. (I ignore scaling options in swing trades for the moment)
Under the above circumstances, I still do not seem the point of a diligent day trader dialing down his per trade risk. What am I missing?
Needed this video thanks so much for your help !!!
Genius Genius what an insight. Thanks mark 👍
Really good. Hadn't thought about it quite like that. Makes a lot of sense. 👍
And its totally wrong.
I keep thinking this every time I see people talking about risk I was going to do a video on it!
It just doesn't add up. Kind of like saying the recommended sugar intake is X grams, but not giving the time horizon over which that's true.
Looking at how correlated trades are is also important. If you're risking 1% of your account on 5 separate oil companies for example or long 5 dollar base pairs then you aren't necessarily managing risk.
Fantastic video!
i've thought about this before. i disagree somewhat. my intuition is that the number of trades shouldn't matter. if you picked a lower risk per trade and a winning strategy, then you would want to do as many trades as possible in the shortest amount of time possible. the good thing about a higher number of trades and a lower risk per trade, is that it's statistically more reliable. with a winning strategy. i would have all my money in trades as long as it's spread out really well. making the most use of a strategy also ties into your other video, about how strategies eventually stop working. of course this intuition doesn't take into account that taking less trades gives you more time to reflect and make changes
what i've also been wondering is, if there is some technical way to calculate how much someone should risk per trade given their "risk tolerance". hmm yes. i think i will look around to see what i can find about the techincal definition of "risk tolerance"
Well expressed.
That's what I'm saying... surely if you have a winning strat then it doesn't matter whether you take the 10 trades per day or per year. If there is a chance of taking 10 losses in a row, then that would be the same within the year. Also, It would be very unlikely to take 50 losses in a row to be out in the 5 day week, but if that is possible, then that yearly trader would be out after 5 years done! Just because they spread it over 5 years, people think well they have time to change the strat, but anyone with 20 losses straight on the second day would surely reanalyse their strategy in the same way. I guess the main factor would be the traders psyche, can they handle a $2000 daily loss as would be "easier" to spread that; but if your a day trader, this should be accepted... to some degree...
I guess another factor, which a lot of people forget to mention, is recalculating that 2% risk. I seen a lot of videos talk about percentage risk yet only calculate it at the start, assuming $10,000 would be 10% down after five 2% risk trades. But if you recalculate after every trade, this can easily be done with software such as MT4, then it wouldnt quite be 10% (very close tho). But with larger % risk it works out better. Something else worth considering
Seems this analogy is based on a day trader that has to trade a certain number a day. One day trade a day would make more sense when compared to swing trading.
Always good videos- thanks! 👍
on the ad... yea do it from the rooftop pull with the sun shining on the screen so you can't see the screen... yea right... ..
I don't really understand why the time frame of my trades should affect my win rate! If I have a statistical win rate of let's say 60% over time...this should apply intraday as well as over a couple of months, shouldn't it? In other words: if I risk 2% per trade, it needs ~50 losing trades in a row to crash my account. With a statistical win rate of 60% this seems very unlikely. Why shouldn't this logic apply if I do these 50 trades in quick succession instead of spreading them over a couble of months? What am I missing?
I agree time should not be a factor. Otherwise you could argue that a swing trader, taking 20 trades a year, makes 400 trades in 20 yrs, should not be profitable over two decades with a 1 or 2 percent bet. Its illogical. In contrary the more trades over a shorter period of time should be more profitable.
I think it's about drawdown (so lose 50% of account then need to make 100% to get back to where you started). Also you don't have to have the losers all in a row. If you have 25 winners and 50 winners in any order, you are now down 50% (if risking fixed 2% of original account on each trade).
This is really good content and so true not thinking about how much I was risking per day was hurting me bad after getting up and than coming down fast trading to much on day it wasn't working...was just thinking about risk per trade
Thank you for helping my trades
The best video I have ever seen on this topic. -best trading -hg
This video is a bit off for USA traders
Someone with 10,000$ taking 10 trades a day can only trade 1,000$ 5 times per day if they are a cash account.
If they were a Margin account then the PDT rule makes them only able to trade 3 times per week. Chances are a margin trader isn't going to risk more than 200$ on each of those trades if they are going all in 3 times a week.
So cash account has a 500$ per week risk
Margin account has a 600$ per week risk
I realize that this video is likely from UK where Margin accounts don't have restrictions. Which means one could trade 10k 10 times per day.
Hi Mark, what is your risk per day? great video!
Thank you, very good strategy of minimizing risk!
I enjoy and appreciate your advice it's helped me so much, thanks alot from South Africa
You are assuming if you lose a $200 trade, you lose all $200? No stop loss?
Great vid..
I don't agree with what you said. If your strategy has an edge. The day trader that risk 2% a trade would be better than the longer swing trader since there are more trades thus it will be less randomness.
This is ignoring the fact that it's statistically impossible to be down every day for 6 months.
Very good point of view... thanks
Great point 👍🏼
2% per trade is good risk per trade
You better have another source of income
aaa2782 😂🤣😂
WOW
Great strategy I love it
Great vid. Totally agree
5% loss max per week, 2 trades per week with a 1:3 risk vs. reward trading Forex.
You guys are talking too much but not talking how to minimize probability of risk from occurring and how to minimize the impact. Reward/ risk is a wage term. It's not risk per trade or per unit time it should be overall risk on all trades. Where are tools to identify risks, how to minimize its probability from occurring and how we can minimize risk. if there is positive opportunity then how to maximize it from occurring and how to improve impact of positive risks.
Good point. One must dig deeper in how to minimize risk. Just an arbitrary percentage number of risked capital is way to shallow to get profitable.
1:1 is what raja does.
thank you so much so useful
So many useful information here.
Who can be like the best and cheapest platform for day trading stocks for people living in UK?
Which platform has got trades execution keyboard shortcuts for free?
Fast execution time.
Wide stocks access.
No Pattern Day Trader limit for US stocks.
Is it anyone like that?
Thanksss
🧡💛💚💙 Great video Marky sir. We would love to see more Crypto trades and Bitcoin scalps too. Youre a gun thankyou sir 🧡💛💚💙
great stuff
Shouldn't be trading if you can blow your account with 2% day even if your taking 10 trades a day
Hey Yo Daytrader!
What makes your account go bust? Your losses or your commissions?
BIG LOSSES ABOVE ALL. TRY TO AVOID THE BIG LOSSES.
@@ukspreadbetting But should I sell with a loss when the other side of my trade, the buyer, regards it as a profitable aquisition? Or should I rather wait for what the other one is aiming for, turning Day into Swing now and again?
You should have a plan of action before entering a trade. Turning a day trade into a long term trade doesn't sound like a great idea. But if you do so make sure to stick a stop to it - either in your mind or an actual one and don't deviate from it.
@@ukspreadbetting Ok. Sounds like a good idea. Like the having a plan and not deviating from it, especially NOT DEVIATING. Agree 100%. If u do, u also start messing up.
Thanx 4 your answers. Keep up the good work 👍✌
Fantastik
Thanks
If you lost 3k over 6 months as a day trader you might want to eeeeeh not day trade :p. Okay if your risk is not allowed to go to minus 3k in 6 months as a day trader, thats okay but if u have to put that rule in you probably allrdy know you are not a profitable trader. Head back to the simulator imho. I would call a rule in i'm not allowed to go minus x during the week or day. But 6 months? As a profitable day trader i would say I cant be below 0 in 6 monts. I should be high in profit. Take in account thats hundrends of trades depending on your strategy and pattern. On that amount of trades not having a decent profit is just well, back to the simulator :p. And start improving.
Your totally right, far better than risking per instant as you said 2% per trade a day with 10000 capital ( 5 trade lost your down 1000 a day...... AIE AIE AIE
Its illogical. So a swing trader will have to wait 20 yrs to reveal that his strategy was not sucessful? 20 trades a year x 20yrs = 400 trades. What will he do then? Adjust the strategy and trade another 20 yrs? 40 yrs in total... In that time span markets may well have changed. Either you have an edge for daytrading or you dont. Simple as that. Time is not a factor.
wow