How To Make A Profit Trading Stocks | 3 Steps To Simple Risk Management
ฝัง
- เผยแพร่เมื่อ 24 ก.ค. 2024
- 🟢 TRADE IDEAS & DISCORD: / figuringoutmoney
🟢 TRADE WITH IBKR: bit.ly/3mIUUfC
TIMESTAMPS: 00:00
Step 1: Laying The Foundation - 00:42
Step 2: Creating Your Edge - 10:35
Step 3: Sizing Your Positions - 26:46
Position Sizing Checklist - 31:02
If you want to become a more profitable trader & do so consistently you will need to button up your risk management and position sizing techniques. This 3 step guide will help get started on the right path to becoming a more consistent trader. It is said that 90% - 95% of traders fail. This has to do with trading psychology and risk management. New traders focus all their attention on picking the right stocks and being right all the time. Meanwhile the most successful traders only need to be right 3 out of 10 times to still make money. They cut their losers quick, and they let their winners win!
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#SwingTrading #DayTrading #RiskManagement
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Okay my dude. I really like this risk management video.
It took me couple months to get my adge around option trading and it turned out its really simple with or some times without the chart. First look up the 85 85 list for momentum value stocks weekly, pick the best once that have positive news, + positive chart, pick 10 best charts and news and positive expectancy if breakout a level how much till next major level. Look at those options weekly, look where most new oi and what strike. Finally look at the bid ask chart , draw your support levels after you calculated the options return if hit target in the today , many website offer that.
Set loss 55% , at 60% take 1/3 zise out, at 200% take 2nd , keep one runner till hit max expectancy,
Usually 3 out of 10 and make 100% minimum, this only for playing the up side, for the down side, I look for the lowest rated stocks, worst earning last quarters, chart at strong resistance or breakdown of weak support, with vol decline and options premium bid ask getting wide, tc2000 offer great services in options art scanning and alerts ,
I pick 10, once rejection candle created on the min time frame , I enter the put, the strike should be in the middle of the next expected support to bounce from,
Sell loss 12% , 1/4 partial take profit 40, take1/4 at 100, 1/4 at 150, keep the last one to reach max expectancy. Sell always at 500% , use 50% of those gains to role over and run the same roles again, there is 20 trade limit a week i take, which is too many for most conservative traders, but system works and with right mentality nothing can stop you, for example last two weeks was interesting to test my system, the momentum stocks were breaking down , shopify after great week , on Friday before this one it moved from 1650 in just last 10 minutes, options alert triggered at lowest in a month , and it was in the list of top pick, option was 1650 bid ask was 1.1 / 1.40 shopify options always wide bid ask, I picked 20 as max pos size i have , thats 10 min before market close on friday, max expectancy was 17.5 for the options, at 250 I sold 5 c at 500 I sold 5, and it was so fast running couldn't enter rise the sell loss faster and sold at 16 the other 1/2,
I turned 120 dollor contract to 1600, 2 min before the close I must be out at any time. While on last week, shopify continued lossing volume while premium hold the down side for puts,, that tells me wall street want it to chil down and take breather,, so calculated max expectancy and took a high momentum stock to the down size,, thats usually a play against the trend,, which have its own rules,, calls bid and ask got wider that daily average is all the confirmation you need , next to find weakest support to break to enter, once break,, the put chart option if shows increasing volume,, enter at ask,, same thing took the put strike 1500 from 1.45 to 21 to That system works, try paper trading , test it, but personally, for this to work you will need mental toughness and total following and respect your loss, because they were well managed, it open test your mind , I like your video and every one have his own system. Whatever works for you. I said interesting last 2 weeks because my system hold , I have more belive and confidence in it, problem isnfor max results and max gains you really truly should accept a big loss, thats why I disagree with you on which is most important postion size and risk management or having the strong tough mentality that is winner and with right attitude, I strong mentality takes 60% for winning trader, 30% for risk management and postion sizing. And 10% for technical analysis only. That means i only check rsi on daily and never on 5 min frame , for my day trade pick. All indicator you need is to have the vol rising, strong candles , that means buyers finding it cheap and want it, no rai, no macd, no Bollinger band on 5 min. Just trust the levels, and trust the trend, trust means don't doubt if you are wrong you have your sell loss setting so why worried ? Enjoy the rest the of the day whole keeping close watch on spy, qqq. Tlt. Vix and the dollor. Once see real weakness in market, I chill and do nothing, this expected , but weakness than weakness is different depending on price action. What level we are at. What is the expected down side for today in the qqq , watch the options for high momentum stocks for a bounce. Take first profit at turn green, 2nd at high of the day, leave 1 to max expectancy as strongest resistance. No day is bad, any day is good. Up or down or just chop chop. ,system hold and works. Use paper trading , tc2000 and have the right attitude to follow the system, and belive and truly truly accept the lost look at your weekly returns. And thank me later.
I hope this information help others too, always start with paper trading until you find your system and once you do , enjoy the ride for the rest of your life, always be positive and willing to learn more, know that market analysis have only 10% weight on decisions for your day trading , if you have fear then it won't work, market tend to go up most days of the year. Im not saying be reckless, im saying don't be afraid, you have your sell loss setting and you already accepted truly that loss, and you have the momentum, price action, levels, volume , when I say levels I means option price levels, those what you need to watch out from, a drop in option volume is concerning, a wider bid and ask is concerning, the only reasons I look at qqq or spy is to trade know if its time to play safer and take some profit off the table while always keep some runners, another reason to trade them , same stock, you know it went up already but still looks ok in the next 30 min and probably will go higher but now you sure its retracing previous breakout, no harm of fast scalp right . Always journal your trades, know why it didn't work write down how to improve it, as mika said, find your edge
Sorry for the long posts . But hope it helps newbie traders , I like to listen to other great traders and I believe mika one of them while I do disagree on how to approach the market , in the end each successful trader is different, each one have different system and they all make money. Because as mika said in the first minute of this gem is being consistent, follow your rules, this means you have to obey your rules religiously, believe in them, that is were mentality needed, thats is why its the heaviest weight on your trading attitude, fix it and walla you are one god damn great trader. For that to happen you should truly accept your loss, break that paradox and you win, the paradox that you should trade fearless without any fear, no fear of losing money, no fear of keeping money on the table , no fear of being wrong, no fear of missing out because you have 5o be patient, you have to wait , put all together and enjoy trading ..
Thanks for all who spent time reading theses tips.
Now this is what I’ve been searching for on TH-cam for so so long. New favorite channel.
I love this channel
Been waiting for this one.
17:00 The optimal Kelly bet for this example is ~6.67% of your total portfolio value should go into each trade. Calculated:
prob(win) - prob(loss)/(win$/loss$)
for this example: .3 - .7/($1500/$500) = .3 - .233 = .0667, or around $6,670.
Hi Mike!
This is excellent, I will be coming back to this over and over again. I do something similar, I read Weissman's book, Trade Like a Casino and learned about Positive Trade Expectancy. Can't stress how important this was for my own trading account.
Also, this strategy works well when you're dealing with accounts that get bigger.
Wow, you should be a teacher. Clear and easy to follow! I knew all you said in this video already... But now i understand, thank you!
YAY!! It’s here!! Thank you very much, Mike
Very welcome!
Excellent video. Thank you very much for that 👍
Amazing. Finally someone explains this so clearly. Thank you so much for the time you put in to making this video.
This was an awesome breakdown. Thanks!
Excellent video Mike!
This was GREAT! Thank you!
Great advice. Thanks!🙏
You are the best, thanks for making this video!!
thanks, good video. Very valuable information!
Thank you for making so much sense in this video. Kudos for sharing your knowledge with the individual investor community.
Very helpful. Thank you very much
Excellent strategy!! Great content Mike. I was needing exactly this concepts on risk management. You make excellent analysis ...I always watch you. thanks so much!
Excellent!! Thank you!
Love this episode!
Your channel is fantastic! You put so much time and effort into educating and helping people like me who are relatively new to trading, I can’t thank you enough! I will definitely be working toward putting this plan into action. God bless!
thank you very much for your guidance and analisys
Mike, you are the man! God bless you, continue to win in life.
I really enjoyed this one. Thank you. Hi Cocoa. ✌❤
When I first started out investing in March of 2020, I dove right into options and took 3k to 88k in like 2 months, having no clue at all what I was doing lol.
I lost pretty much all of that 2 months later. And am still building my way back up.
As I get more and more experience, I realize more and more how nice it would have been to held that 88k, and compounded it 😢.
But it was a great learning experience overall. The ultimate casino story
very good explained.Thank you Sir.Hope to se more video like this
Awesome video Mike
Thanks Peter!
Great video! Thank you! Now I need to translate this into an excel calculator for options trading if I know my stop will be 25% to help size positions accordingly.
Really great breakdown that I certainly needed. I took notes and I am willing to commit to consistency! Going to start implementing this tomorrow…hopefully the market doesn’t crash on me before I can change around some positions 😆😳
Just brilliant! Let your winners win and cut your losers quick.
You are one ☝️ of few 😎
Thanks bud.
Great; thanks!
Welcome! Thank you for the support
Awesome! When are you coming out with some courses? Tech Analysis and options?
I like it. Thanks. The one thing to watch out for on the downside is a gap down. You will take a larger loss than .5% per trade when that happens. Something to consider.
Great video, Michael. I had everything calculated the same way and actually build a R:R calculator for quick entry. The one item that I was missing was #2 Do you believe this is a quality setup.
It's part of my plan now!
Hey Michael, this is one of the most useful trading videos on TH-cam! Hopefully you can do more of this nature as they help out community of traders progress along their journey to becoming consistent and profitable trading professionals.
Thank you!
Thank you. It would be great if you extend this strategy into trailing stop loss, and calculations for figuring out the proper trailing stop loss setup.
Class, just class.
exellent
Very informational video. I learned a ton. Great.
Why were you so mad the whole video though? lol
Thanks for the great content.
Hi Mike.
Can this risk strategy work on FX, commodities with leverage added to the positions?
Thank you so much Mike for this video! I learned a great deal from it as a novice trader.
One question on the "Current Dollar Value of 1 Risk Unit". As it depends on my NAL, which changes every second as the market goes up/down, how "updated" should the NAL value be for the calculation? Do I do a "NAL update" at the end of the week to determine the Dollar Value of 1 Risk Unit for the next week? Or do I do it on a daily basis? Thanks a lot in advance!
I've realised I'm a completely negligent maniac hahah
Thanks for this video it's the slap in the face I needed
Haha!
Thank you for watching
I been doing this almost 5 years. My first year was my best. This shit will humble u so quick. I’d argue that it’s never been like this. These traps Nd manipulated nonsense..
Me too - phenomenal 1st year, beginner's luck, I guess
Thanks a lot! Very comprehensive! How about „let your winners win“? Do you exit the trade completely because it has reached the 3:1 ratio?
Great question. Answer is no! I will jist reduce risk by raising my stop loss or taking partial profits :)
@@FiguringOutMoney thanks! That could be another topic for a video :) ATR trailing stop?
Following your advice Michael, I made a shiny web app for position size calculation. My problem is, I can't trade my favorite derivates using your low risk assumption... 0.5% and 5%, because of my small budget (NLV
Started watching then realized it is not for long term investors. Good info anyway.
Absolutely is! You can set up trades on any timeframe. Weekly and monthly included. Long term traders have the advantage of trend following which helps create even greater risk to reward ratios. You may be able to risk 1 unit and catch 10. Definitely should check out the "turtle trader" book / strats.
I had a winning January, a losing February, a losing March, a losing April, a losing May, a losing June and a winning July. I’m up 18% year to date. It’s not great and I’m pissed at myself for doing some stupid stuff but the point you made in the video is absolutely correct.
I only have one complaint… Where is Coco
Our brains are not wired to cut our losers quick and let our winners run. There have been psychology experiments around this where people were offered a “sure thing“ or the opportunity to risk it and make more or lose it all, the data suggests most people will take the sure thing. On the other hand, when offered a guaranteed loss, or risk it to either lose more or come back from the loss most people will risk it and try to come back. This is essentially holding your losers and cutting your winners
You never go broke taking a profit is absolutely wrong!
👍🤗🙏
What’s the edge though?
The edge is this case is your trade expectancy. perhaps you only need 2/10 or 3/10 winning trades to be a profitable trader. Have to calculate your trade expectancy and risk reward for what best fits your style of trading.
If you’re swing trading, you could always lose more than your “max loss” because your stops are meaningless overnight. How does that factor in?
They are not necessarily meaningless. If the stock you are trading gap downs, you will have a market order at open to get out. That happens, great question. The goal would be to put on stops that have room (perhaps 1 or 2 ATR below support). You do that and have the proper position size on, you are limiting your risk greatly. Also, it's important not to be in to many stocks in the same industry or sector. Just like you can get gap downs that hurt you, you will also experience gap ups that will greatly reward you. hope that helps
I'm mostly a momentum day trader and I am profitable. I'm getting very curious on option trading but seems very risky. As they say, the greater the risk the greater the reward
It is riskier, however only to an extent. Buying calls or puts by themselves has the worst probabilities (Under 50%). If you lear spreads, that can change dramatically. However if you are just scalping intraday calls and puts, well then that is different because you do not need to worry about that overnight theta burn.
@@FiguringOutMoney Yes Michael, I try not to sleep with my trade but it does happen
Getting in long at the very bottom and getting in short at the very top. simple
Finding a system that will give you a 1:3 Risk:Reward edge even 30% of the time is the real trick... not to mention when you tweaked the numbers up to 55%... thats just unrealistic