How do pro firms determine the "daily" dollar stop for a trader? The firm I was with in NC would raise your daily stop (or decrease) based on your avg. profit level for a certain period of time. How do other firms manage individual traders? The group I was with was rather small: 25 traders. I am now trading for myself at Carlin (Generic). I am entertaining the idea of starting a small pro group. Thank you for your input.
Firms that have good risk management take everything into consideration. Diversification, strategy, concentration, prior performance and trader relations are all key factors. Firms that micro-manage based on hard rules generally are inexperienced, thinly capitalized and not successful. Risk management needs to be performed by an individual who is not directly involved with the traders, does not trade and is consistant with their thought process.