When I Started Day Trading My Account Went From:
$30k—> $3k—> $1,000,000+
In this thread I’ll teach you one of the most IMPORTANT aspects of trading:👇
(1/11)
$30k—> $3k—> $1,000,000+
In this thread I’ll teach you one of the most IMPORTANT aspects of trading:👇
(1/11)
1) Risk Management
The most important aspect of trading is risk management.
This is because the market is very volatile and therefore strategies have phases where they have drawdowns.
In these periods RISK MANAGEMENT is key.
The most important aspect of trading is risk management.
This is because the market is very volatile and therefore strategies have phases where they have drawdowns.
In these periods RISK MANAGEMENT is key.
2) Why is Risk Management Important?
Trader A (No Risk): +$1,000, -$2,000, +$500 = -$500
Trader B (Proper Risk): +$500, -$100, -$100 = +$300
In scenario 1 trader wins 2 trade but ends the day red.
In scenario 2 trader loses 2 trades but ends the day green.
Why?
Trader A (No Risk): +$1,000, -$2,000, +$500 = -$500
Trader B (Proper Risk): +$500, -$100, -$100 = +$300
In scenario 1 trader wins 2 trade but ends the day red.
In scenario 2 trader loses 2 trades but ends the day green.
Why?
3) Defined Risk
This is because in scenario 2 the trader loses the same amount of money each time or the same “r multiple”
This way a trader knows exactly how much they will win or lose rather than just going off what “looks good.”
This is because in scenario 2 the trader loses the same amount of money each time or the same “r multiple”
This way a trader knows exactly how much they will win or lose rather than just going off what “looks good.”
4) Risk/ Reward
In this table we can see that winning a higher percentage in trades means you need a lower risk to reward.
Most people don’t understand that even with a 20% win rate they can be profitable with a higher r/r.👇
In this table we can see that winning a higher percentage in trades means you need a lower risk to reward.
Most people don’t understand that even with a 20% win rate they can be profitable with a higher r/r.👇
5) Strategy?
I know traders that literally only trade Support & Resistance super basic trades & are millionaire traders.
Why?
Because their risk management and risk to reward is their #1 priority, not their strategy.
I know traders that literally only trade Support & Resistance super basic trades & are millionaire traders.
Why?
Because their risk management and risk to reward is their #1 priority, not their strategy.
6) Example
Here we see a support and resistance trade with $SPY
A simple trade here would be a break of that resistance and a retest to show the resistance turning support.
Here we see a support and resistance trade with $SPY
A simple trade here would be a break of that resistance and a retest to show the resistance turning support.
6.5) Example
On every trade I like a r/r of atleast 2.
Therefore on this trade we will aim for that $420 whole psych number.
We put our stop below the previous consolidation.
This is a 2.67 R
This means if we risk $200 we make $534.
On every trade I like a r/r of atleast 2.
Therefore on this trade we will aim for that $420 whole psych number.
We put our stop below the previous consolidation.
This is a 2.67 R
This means if we risk $200 we make $534.
7) Play Out Trade
Here we see the trade worked and with proper risk management we made $534.
Now if we risk $200 for another 2 trades we will remain profitable by $134 because we have defined risk.
Here we see the trade worked and with proper risk management we made $534.
Now if we risk $200 for another 2 trades we will remain profitable by $134 because we have defined risk.
In Conclusion,
This is why this is the most IMPORTANT aspect of trading and most new traders don’t put enough emphasis on learning it.
If this thread helped you:
- Like + Retweet Original Tweet!
- Follow For More Education!⚡️
This is why this is the most IMPORTANT aspect of trading and most new traders don’t put enough emphasis on learning it.
If this thread helped you:
- Like + Retweet Original Tweet!
- Follow For More Education!⚡️
P.S-
I made a whole video on this EXACT topic with more in depth examples!
Watch that video NOW:👇
youtu.be
Daily Trade Reviews + EDU:👇
instagram.com
I made a whole video on this EXACT topic with more in depth examples!
Watch that video NOW:👇
youtu.be
Daily Trade Reviews + EDU:👇
instagram.com
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