I want to talk about PPC (Protect Precious Capital). For "Thingamumbobbies" you may freely exchange words like "facts", "rules", "principles", "strategies", "guidelines", "fishing lines" or "elephants"......whatever works for you. I don't want anyone getting bent out of shape if we don't stick to the "facts". Besides, this is my thread, and I really don't care if by page 2, the discussion turns to how to best replace the clutch in a 1975 VW Beetle.
Seriously, here are a few loose ideas I have bouncing around in my head (lots of room in there by the way), for how to best protect your hard earned/won capital.
1. Don't trade! This is by far the most effective strategy as you are assured you won't lose any capital! Effective, but not practical, as we would all like to make at least a little money. So, let me expand that to: Don't trade unless you can take only an A trade having the highest chance of success and the lowest chance of loss.
2. Move stops to BE as quickly as possible! You should set a pip profit, 10, 15 or whatever that once hit will prompt you to move your stop to break even. The quicker you can eliminate the risk the better. I don't like break even trades, so as soon as I can do so, I've been moving my stops to 1 pip beyond break even. That way I'll at least get something out of the trade even if it's only a dollar.
3. Use consistent position sizing! Whatever money management strategy you use, do so consistently for each and every trade. You have one trade you don't feel very confident about so you risk only 1%. On another trade you have great confidence so you risk 4%. You can't fool the market. It knows how much you are risking and will move accordingly. Remember, the market is designed to disappoint the largest number of traders. Inconsistent position sizing will dig you a deeper hole faster, and then make it harder to get out. If you pick 2%, then use 2% on each and every trade! Period!
Okay folks. Take it from here with additional elephants of your own, or feel free to dispute mine. I'm open for improvement.
Dial
Seriously, here are a few loose ideas I have bouncing around in my head (lots of room in there by the way), for how to best protect your hard earned/won capital.
1. Don't trade! This is by far the most effective strategy as you are assured you won't lose any capital! Effective, but not practical, as we would all like to make at least a little money. So, let me expand that to: Don't trade unless you can take only an A trade having the highest chance of success and the lowest chance of loss.
2. Move stops to BE as quickly as possible! You should set a pip profit, 10, 15 or whatever that once hit will prompt you to move your stop to break even. The quicker you can eliminate the risk the better. I don't like break even trades, so as soon as I can do so, I've been moving my stops to 1 pip beyond break even. That way I'll at least get something out of the trade even if it's only a dollar.
3. Use consistent position sizing! Whatever money management strategy you use, do so consistently for each and every trade. You have one trade you don't feel very confident about so you risk only 1%. On another trade you have great confidence so you risk 4%. You can't fool the market. It knows how much you are risking and will move accordingly. Remember, the market is designed to disappoint the largest number of traders. Inconsistent position sizing will dig you a deeper hole faster, and then make it harder to get out. If you pick 2%, then use 2% on each and every trade! Period!
Okay folks. Take it from here with additional elephants of your own, or feel free to dispute mine. I'm open for improvement.
Dial
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