Thread by @KillerTrader_

Important risk management points and how to use them:

A 🧵

#StockMarkets

(1/n)

Risk management is the core of trading. No matter how good of a setup we have; if we do not manage risk, properly, trader will not be profitable in the long run.

As a discretionary trader, I follow certain rules for managing risk

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Day limit: I have a limit of 1.5% risk on my account per day. It is per day; not per trade.

I usually take 2-3 trades in a day and use this limit across trades.

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Moving SL to cost: The bare minimum reward I look for is 2-2.5R per trade. Once a trade starts showing me 2-2.5R, I move my SL to cost and book partially.

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Different position sizing across trades: Since there are various technical analysis points I look at before taking a trade; I split my trades into two categories

Category A trades - I use regular position sizing.
Category B trades - I use half my usual position sizing.

(5/n)

This is also applicable for directional and reversal trades as well.

Overnight risk: No matter what analysis tells, I do not carry a position home unless it is showing me a profit.

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Unless I take a position at closing time, if the position does not perform on intraday basis, I do not carry it home.

Further, I always hedge my positions in such a way that it protects my capital if market opens beyond my planned risk range.

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Other aspects: Being a full time trader, I have access to back up computer; one ipad and back up internet and power. Back up dmat acc with spare funds ready to be added

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Also, I have a back up software as well. Key here is to make sure that two software do not have same data provider.

Because if the data feed goes down; does not matter how many backup software you have.

(9/n)

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