Risk Management for Day Traders

Lessons

1. Why most day traders loseWhat the research says about day trader results, four common reasons traders lose, and which of them you can actually control. 4 min
2. Decide your risk before the tradeHow to set the most you will lose on any one trade before you enter, in fixed dollars or a percent of your account. 3 min
3. Where the stop goesHow to place a stop at chart structure or a fixed distance, when to use hard and trailing stops, and why never to widen one. 3 min
4. Position size, from points to dollarsA simple formula to turn your dollar risk and stop size into the right number of contracts, with MNQ and NQ worked examples. 3 min
5. The daily loss limitWhat a daily loss limit is, how to set one from your risk per trade, and how to make sure you stop at it. 3 min
6. Drawdowns and the math of getting backWhy a loss takes a bigger gain to recover, how often losing streaks really happen, and what a trailing drawdown means. 3 min
7. Expectancy: the number that mattersHow to calculate expectancy in points from your win rate and average win and loss, and why you need enough sessions before trusting it. 3 min