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U should set ur max loss per trade (1R) based on % of ur account. In short, ask urself "what FIXED amount am i willing to lose back to back b4 my acct becomes untradeable".
Plan 4 the worst, so give urself a 1R that will let u lose at LEAST 20 trades in a row before blowing up.
Plan 4 the worst, so give urself a 1R that will let u lose at LEAST 20 trades in a row before blowing up.
So example if u have a $50K acct, u can only lose $25K to be under PDT.
So $25K / 20 = a 1R of $1250.
That means if u are a cursed fuck & lose every single trade 1 month, it will take 20 back to back losses to put u under PDT. and that's still VERY aggressive in my opinion.
So $25K / 20 = a 1R of $1250.
That means if u are a cursed fuck & lose every single trade 1 month, it will take 20 back to back losses to put u under PDT. and that's still VERY aggressive in my opinion.
For more conservative traders I recommend making room for at least 30-40 consec losses. Now we know that wont happen unless u're an absolute dumb fuck (or cursed by Odin, Osiris AND Zeus combined), but knowing that u have such a huge margin of error will give u peace of mind.
Most traders' risk management is so TRASH that 10 losses in a row will blow em up. ur acct will grow the fastest that way, but ur risk of ruin also goes up substantially if multiple black swans happen. Not worth it imo. U wanna be in this job for the long run.
#BearTipOfTheDay
#BearTipOfTheDay
