Risk Management and Longevity in Trading: Focusing on Downside Protection
you may be right that executing a trade before imminent pre-market data can be rewarding if the price gaps in your favor. that is a opportunistic and optimistic view and we all bound to begin with such mindset. we want quick profits, we want quick wins. but over time and years in this game, especially getting humbled time over time again, you'll recognize and respect that that you have absolutely zero risk control over the binary outcome of the post event price reaction (except navigating within the 24-hour futures market).2 back-to-back pre-market economic data releases (yield-sensitive) remain and I am definitely on the sideline for today (but $E-mini S&P 500 - main 2503(ESmain)$ and $E-mini Nas
This may come as a surprise to some of you, especially those who haven't gained traction or had trades that could stick in recent period (even I myself got stopped out of $iShares Expanded Tech-Software Sector ETF(IGV)$ on two separate attempts since the below post but at the end of the day, it's all about numbers and probabilities)No. of SPDR Sectors Above 50-MAOne Month Earlier: 1 out of 11Today: 10 out of 11Recent weeks may have been a chop fest but quite a number of charts at sectoral and group level are displaying tightening action similar to $iShares U.S. Aerospace & Defense ETF(ITA)$ here. Take a bird's-eye view of $Communication Services Select Sector SPDR F
the issue of 1% risk (% risk to equity to be exact) is not about handling the emotions of potential dollar loss relative to account sizeit is the limitation from 1) requirement of funds (net liquidation value) for the position sizing to execute the trade, 2) the high concentration of funds within just 1-3 names in your portfolio because you will be margined beyond 100%, especially if you positioned on low ADR% names. the reason here is the stop loss distance because you wouldn't have a wide stop beyond 1-ATR if you swing trading to make a singular trade size significant in profits term but within fixed % risk control.don't take my word for it, this is a very simple exercise to do on spreadsheet yourself. put up 3 trading ideas of various ADR%, design your entry price, stop loss price in co