Numerous studies has been done on the risk of blowing one's account and they suggest not risking more than 2% of your capital per trade. For new traders, they suggest limiting it to 1% of your capital per trade. Personally, I use 2% and since, I trade equity options, I can limit that to 2% to the cost of the option premium and that is on a worst case scenario. For futures, not sure if you can limit it to 2% but, if you can, you should! Too much leverage can be bad for you too!
Yes you experienced "dumb luck". The current market is not the time to become enlightened on how the ES works. If you start now to make 15 trades a day you would probably blow out your account in less than a month. Better to just do red/black in Vegas. If you are really serious. Paper trade for a while. Then go live. Blow out an account or two and then you would finally be ready to make some serious bank.
Yea, just when you think it’s all going great, what you were doing yesterday doesn’t work today. I did really well in the last few trading days because forex was pretty flat and I trade ranges, but I’m ready for some volitity to return so I’m being extra careful, so should you after a good run
You're risking $250-$400 per trade (assuming one contract.) Your average profit per winning trade is about $115 Did you mean to say your risk is 5-8 ticks instead of 5-8 points?
If you are absolutely rule based and not discretionary -- then even though it was a small sample -- I would venture to say that it was not "luck" but the disciplined execution of a viable trade plan. (Let's hope your plan is not based on indicators and tick charts.)
Thanks for your comment and "good eye". You're right MACD is NOT an "indication" of my love for it as a trading indicator -- just a easily remembered "handle". My post was to caution on the continued reliance on indicators (lagging and not predictive) as a decision tool for entering and exiting trades. As you know indicators can "fool" those who are relying on them. So, if a trading decision "tool" is not predictive -- then in my view it is not only worthless but sometimes dangerous. I only depend on what will tell me what the next price will be well in advance and this is not using indicators.
Actually there is a great way to use lagging indicators to trade with. Example you could keep track of how far a price spikes above and below an average before it turns opposite direction. Also those inflection points when failed usually signal the beginning of a momentum move in the same direction.
%% Like my banker dad said ''accidents dont just happen, son -they are caused'' Good questions . Having blown up one account, myself [small time frame trading] that should be a word to the wise, risking too much. On the bright side Stanley Drunkenmiller blew up an account also, so things can get better.