Risk management


#1

Trader good morning

Apex Investing Customer Service Morning how are you doing

Trader great, have a question on money management

Apex Investing Customer Service yes what you got (Disclaimer not advisors telling you how to actually manage your own money but would be glad to tell you personal opinion ? seek a licensed advisor for financial money management advice as we are not advisors)

Trader if im risking 250 a day that means max loss of 250 for the day then i quit correct

Trader I would like to have a stream lined money management system that I follow diligently

Apex Investing Customer Service yes so you would need to look at what is coming up like news trades, core trades, etc… gap trades always happen before core so you can factor them in if they happen 250 is of course just a generic guideline Apex Investing Customer Service i have guys who do 1,000’s and those who do a flat 50 per trade i use the 50 per trade and 250 per day to show a couple examples of risk management as risk management is so trader specific the only way to totally equalize it would be to require everyone to have say a 5k account etc…

Apex Investing Customer Service if they did we could always say this many contracts etc… i prefer equalized risk per day method not that is max risk it does not mean you have to risk that much also it is open risk… so if you close trades profitably you actually ahve more contracts you can do

Apex Investing Customer Service though i rarely like ti give up all my profits on just one more trade etc… does any of this help…

Trader I have a 5k account and would like to set up a money management plan for it that does help

Apex Investing Customer Service money management is one of the trickets parts of trading as it is so individualistic

Trader my account is going up and down

Apex Investing Customer Service thats good you have to have one good that you are setting up a money management plan that is

Trader but not consistently up

Apex Investing Customer Service yes if you risk 100 one day 300 next day 100 next day etc… your equity curve will constatly bounce around

Trader yep

Apex Investing Customer Service you will be spinning your wheels

Trader lol yep

Apex Investing Customer Service or it goes down - at least spinning wheels you are learning and not losing but if you get the money management down you will get a lot more consistent equity curve

Apex Investing Customer Service but if you just randomly select contract size your win ratio wont matter as your results will vary so much want equality probability and profitability we do good on the win ratio side (at least so far)

Apex Investing Customer Service but you have to manage the risk side with 5k that is much easier to do also you have to withdrawal money don’t just keep upping size because your making money ie if you have 5k - any week your above 5k pull out at least half of it i don’t care if your up$50 or $1,000 pull out half every week

Apex Investing Customer Service this will keep you from upping contracts right after a winning week and giving it all back the next week plus that is the whole point right - to pull money out amazing how many traders never make a withdrawal they know how to make those deposits but they can’t even find the withdrawal button

Trader thats a great plan

Apex Investing Customer Service i find out how to withdrawal the second i put money in as i only put it in so i can ideally pull more than i put in there out of there

Trader so you can still scale your account by pulling out half and letting it grow

Apex Investing Customer Service yup just don’t scale that fast i know we all want it to be million overnight

Apex Investing Customer Service but you have to scale in both directions most people just want to scale up they keep the same risk when it goes down

Trader :slight_smile: yep

Apex Investing Customer Service so say you where using the 250 a day rule that really is 5% so that really is your rule

Trader yes

Apex Investing Customer Service so if it shrinks to 4k then you should be at 200 a day

Trader is 5% too much

Apex Investing Customer Service if it grows to 6k it would be 300 a day Only scale when the % is at least $50 difference

Trader ok

Apex Investing Customer Service 5% on a day is actually pretty normal for an option trader because an option trader can actually make 5% on their account in a day as well

Apex Investing Customer Service nadex is options (defined risk) however, your goal should be as it grows…to get it down to 2% then ideally at 1% id 100k account risking 1k a day to make 1k a day

Trader as long as your 1:1 risk correct

Apex Investing Customer Service many traders will stay at 5% but when the amount has doubled they will drop to say 4% ie lets say today you are at 5% but your account gets to 10k then go to 4% going forward when that doubles to 20k then go to 3% etc…

Trader that makes sense

Apex Investing Customer Service it will shrink your gains but also your losses and lets you grow your account and positions faster but makes sure that you are not risking say 5k on 100k

Apex Investing Customer Service 2:00 PM its all about what is easily recoverable for you the bigger it gets the harder that money is to recover out side of the trading world and the smaller the % if scaled the longer you lost and trading is about survival first and foremost many traders keep the same % when account grows and that makes it so easy to just give it all bac just as fast so that is why taking off half every week your positive

Apex Investing Customer Service and reducing the % at least by .5 or 1% every time your account doubles is a good plan

Trader that’s great info

Apex Investing Customer Service you get paid, and become more “cautious” as your account gets larger so you can protect your hard earned wealth and get to actually spend some of it

Apex Investing Customer Service i don’t like trades that are not very close to a 1:1 risk or better

Trader should i stop trading for the day once i reach my 250 in profit

Apex Investing Customer Service to hard to make it back if there not that is up to you

Trader me too

Apex Investing Customer Service when i hit the profit goal that equals the risk goal i usually still trade if i see a good setup but i usually am a bit more conservative as i don’t want to give it all back

Apex Investing Customer Service but love having days that say make 2x 5x etc… the normal day

Trader good plan

Apex Investing Customer Service ie lets say on news and gap you make 250 then 2 cores come out you probably would only want to do 1 contract on each or just call it a day but dont do 3 on one and 2 on the other and risk it all

Trader makes sense

Apex Investing Customer Service on the p3 stats i assume 100% of the money is taken out

Trader that really cleared up a lot for me

Apex Investing Customer Service to make it even more conservative

Apex Investing Customer Service so there is no compounding up/down etc… and i never know when someone is joining in so by doing that it makes it easier to see what would have happened had they started at any moment glad to hear it


#2

On a $1600 account, I’d be risking $13 per trade. Wouldn’t that mean DOTM binaries? (1600x.05=80/6=13~)


#3

you will have to risk more or take less trades as you need about a 3k account for really good risk management - its okay to do this just understand you are overrisking and need to lower it as soon as your account is at 3k