So was this was one of those meaningless, very S-T % return trades I discussed earlier? How long on average? But either way, without knowing the details of the trade, it's risk, it's prob, it's sector, time frame ect.... it lacks context.
Feigning stupidity? It was over the quarter and consisted of dozens of trades. The account never took more than 3.2% in heat. All of the trades are in the journal and all fills were marketable.
Atticus: Forgive my ignorance. It seems one could do very well with a risk/ loss like this. A 200 batting average would keep you in the game indefinitely and 300 or 400 your golden. Do you have to go far out of the money to achieve this? Or do you cut loses quickly? Thanks
My thinking is FOTM (maybe a daily std. dev. or 2) would be necessary to risk 1 to make 5. I guess Iâm thinking about flies with my comment and thatâs why I directed the question to you. Just trying to learn.
I never annualise the return on individual trades because I see that as meaningless. I have a column that annualises the daily return, which I hardly ever look at. I do pay more attention to the annualised number on weekly and especially monthly summary sheets. In any case all it tells you is if you manage to continue what your are doing, that is what you will end with, ie pie in the sky.
I guess I'm all wet. As I think more about this... no need to go FOTM. Why risk the entire debit? I choose what to risk, so give it a reasonable amount of time and cut out if my 1 to 5 is being violated. It's like trading stocks but there is more forgiveness.