Money Management in Day Trading

Posted by Deb | Futures Trading Tips | Thursday 12 August 2010 9:54 pm

I read yesterday a great article by Ilan Levy-Mayer, VP of Canon Trading, the company through which I do my  trading.  In this article he gives some rules to managing your risk when day trading.  He sees the managing of the risk as the most important factor in determining whether a trader will be successful or fall.  Any trader will have bad days, in which he loses.  Only a good risk management will help him not to lose all his money, and to be mentally capable of continuing the trading successful.  As I said here before, a trader’s mentality and psychology is the most important part of trading, more than any market indicator.

His rules are similar to the rules I wrote down here in my trading rules and tips pages, though he added a few interesting ideas.  I will give here an outline of his system:

  1. Daily stop loss:  Every trader must set for herself a daily loss limit.  Your limit depends on the capital you have and your personality:  How big a loss are you able to deal with.  When the loss exceeds your daily stop loss, close your positions and stop trading for the day.
  2. Daily maximum number of trades:  Going on with more and more positions will set you for losing.  It will make your fees too high for any substantial profit.
  3. Set your breakeven level:  This is an interesting idea I haven’t heard about before.  You should set yourself a certain profit limit, which if you get to during a day trading, and then lose again your profit, you should stop trading for that day.  The psychology of this, as I understand it, is that there is usually a certain limit that if you pass and than start losing you feel as if you have to fight to get it back, and that sets you to lose.
  4. In a similar way, set your profit target:  This will be a limit greater than your breakeven level.  For this target you will set a trailing tail.  The logic of this pair is similar to that of the breakeven level:  If you get to the profit target or pass it and then start to lose, don’t let yourself lose more than the trailing level.  If your profit goes down from your maximum profit of that day by a sum equal to the trailing tail, it is time to stop for the day.  The logic here is similar to that of the breakeven level:  When you make a nice profit and than lose it, after some critical point you can’t take it and lose your logic.
  5. Profit limit:  similar to your daily loss limit, set yourself your profit limit.  Don’t let your profits make you too greedy.  Enough is enough, and if you try to make more and more positions you will start losing.  Your trading fees will accumulate, making your profit smaller.
  6. Stick to your rules!  This, from my experience, is the most difficult rule of all.  But if you do manage to follow these rules, with the limits you set for yourself, you will create for yourself  a positive trading psychology, and make your chances to survive and make profit much higher.

 

Good luck in your trading!

Sponsored Links:
Used Furniture For Sale Motorcycle Cover Discounts Remote PC Access Software Quickest Way To Lose Weight bakersfield movers Mini Projector

Share

89 Comments »

  1. Comment by Forex — August 13, 2010 @ 9:13 am

    Wow, this was a really quality post. In theory I’d like to write like this too – taking time and real effort to make a good article… but what can I say… I procrastinate alot and never appear to get something done.

  2. Comment by Praise And Worship CD — August 13, 2010 @ 6:29 pm

    We’re a group of volunteers and starting a brand new initiative in a community. Your blog provided us valuable information to function on. You have done a marvellous work!

  3. Comment by Forex Trading Alert — August 15, 2010 @ 12:38 am

    Ooh shoot i just wrote a big comment and as soon as i strike reply it came up blank! Please inform me it worked right? I dont want to submit it again if i do not have to! Either the weblog glitced out or i’m an idiot, the second option doesnt surprise me lol. many thanks for a great blog!

  4. Comment by Tamica Krall — August 15, 2010 @ 7:22 am

    Heya , I’ve a brilliant way to make shed loads of money online blogging. I suppose this is mainly for the website blogger but there are probably more bloggers reading this. I have made thousands using the techniques described in the product and its only been two months. Free Money Making Blog By Blogging To The Bank

  5. Comment by Deb — August 15, 2010 @ 7:33 am

    Sorry, I didn’t see your comment. Please write again.

  6. Comment by Chakrapanye — August 16, 2010 @ 4:24 pm

    Thanks dude, you are awesome! I am going to use one of these in a flash project I am doing for class.

  7. Comment by Guadalupe Paloma — August 17, 2010 @ 12:23 am

    Hey guys i’d like to let you know about this great system i have been using during the last two months called Auto Blog System X. This is probably mainly for the website administrator but also anyone else intrested in making money or starting to publish blogs. I personally made approximately $3000 on this during my first month. It basically is a system that generates blogs for you 100% on autopilot that gets you plenty of visitors to your site from google as well as other search engines. Do not take my word for it… Check their website out and i guarantee they will hook you in. Its just amazing :) Make Money Blogging – Auto Blog System X

  8. Comment by Lauren Manzo — August 18, 2010 @ 8:08 pm

    I loved your article post.Really thank you! Will read on…

  9. Comment by Deb — August 18, 2010 @ 9:57 pm

    Thanks. See you again!

  10. Comment by horoscope 2011 — August 19, 2010 @ 1:09 am

    Can I link to your post?

  11. Comment by Deb — August 19, 2010 @ 7:23 am

    Of course. Thank you.

  12. Comment by Adam Logain — August 20, 2010 @ 7:43 pm

    Nice blog!

  13. Comment by Deb — August 21, 2010 @ 8:49 pm

    Thanks!

  14. Comment by mbt chapa — August 23, 2010 @ 8:31 pm

    I just stumbled on your blog when i was lookng on google. I have to say that the information here was the most complet that I found anywhere. I am definitly bookmarkin this to come bck and read later

  15. Comment by Deb — August 23, 2010 @ 9:28 pm

    Thanks

  16. Comment by Forex Trade Copier — August 23, 2010 @ 9:40 pm

    I was intrigued and impressed by this article. Huge thumbs up. Many thanks.

  17. Comment by Deb — August 23, 2010 @ 9:44 pm

    Thanks, Mr. Forex Trade Copier.

  18. Comment by Jessica the Money Multiplier Girl — August 24, 2010 @ 12:16 am

    Unbelievable, that’s just what I was seeking for! You just saved me alot of work

  19. Comment by Deb — August 24, 2010 @ 8:28 am

    I am glad to hear that.

  20. Comment by best forex signal indicator — August 24, 2010 @ 10:25 am

    Great read. I found your site from a google search, and was glad i did. The information has helped me immensely.

  21. Comment by from gmail.com' rel='external nofollow' class='url'>Latashia Geffre — August 24, 2010 @ 1:11 pm

    Great!This article is Innovative,tRight here are a Great deal of new idea,it Offers me inspiration.I Believe I will also inspired by you and Believe about more new ideas

  22. Comment by Luetta Grunert — August 24, 2010 @ 5:16 pm

    This is all very new to me and this article really opened my eyes.Many thanks for sharing with us your wisdom.

  23. Comment by government car auction — August 24, 2010 @ 5:20 pm

    Needed some info on this for a school paper thanks for this.

  24. Comment by Rosaline Vegar — August 24, 2010 @ 7:16 pm

    Good Write-up, Each and every Place is good Sufficient.Thanks for sharing with us your wisdom.

  25. Comment by Deb — August 24, 2010 @ 7:43 pm

    Thanks, though this is not my wisdom – as I said, this is a summary of a paper I read.

  26. Comment by Luxury Homes for Sale Spanish Fork Utah — August 25, 2010 @ 9:37 am

    Im grateful for the blog post.Really looking forward to read more. Fantastic.

  27. Comment by Vince Murrish — August 25, 2010 @ 10:03 am

    This is all very new to me and this article really opened my eyes.Many thanks for sharing with us your wisdom.

  28. Comment by Deb — August 25, 2010 @ 12:01 pm

    Thanks, House Painter (Is that your name?)

  29. Comment by FREE 11+ English Papers — August 26, 2010 @ 12:11 am

    I absolutely love reading your posts, the manner of writing is impressive.This post as usual was enlightening, I have had to bookmark your blog and subscribe to your feed in feeburner. Your website looks great.

  30. Comment by Deb — August 26, 2010 @ 6:54 am

    Thank you! Thanks for writing here!

  31. Comment by Croydon Plumber — August 26, 2010 @ 10:55 am

    What a great article. I spend days on the internet reading blogs, about tons of different subjects. I have to first of all give kudos to whoever created your website and second of all to you for writing what i can only describe as an post. I honestly believe there is a skill to writing articles that only a few posses and frankly you have it. The combination of informative and quality content is definitely extremely rare with the large amount of blogs on the internet.

  32. Comment by health Weight loss — August 26, 2010 @ 3:42 pm

    Excellent read, I just passed this onto a colleague who was doing a little research on that. And he actually bought me lunch because I found it for him smile So let me rephrase that: Thanks for lunch!health weight loss

  33. Comment by Wilhelmina Mende — August 26, 2010 @ 4:35 pm

    Your Weblog article is very intersting and fanstic,at the Exact time the Weblog theme is unique and perfect,great job.To your

  34. Comment by online education courses — August 26, 2010 @ 4:45 pm

    Thanks for an idea, you sparked at idea from a angle I hadn’t given thoguht to yet. Now lets see if I can do something productive with it.online education degree

  35. Comment by Jaqueline Tobia — August 26, 2010 @ 5:58 pm

    I was Truly Appearing for this Source a few Days back. Many thanks for sharing with us your wisdom.This will absolutely Heading

  36. Comment by Alexis Pautler — August 26, 2010 @ 7:19 pm

    Man you’ve obtained the finest website on the net hands down.

  37. Comment by Hip Hop — August 27, 2010 @ 9:20 am

    I think this websites format is made pretty good.

  38. Comment by Terry Mimozo — August 27, 2010 @ 1:59 pm

    I was actually Seeming for this resource a Several weeks back. Many thanks for sharing with us your wisdom.This will absolutely going to Aid me in my Assignments .

  39. Comment by Shayna Ashburn — August 29, 2010 @ 3:56 pm

    This kind of an amazing article! I really enjoy reading it, very good insights, the article is very ell-Mentioned. A thumbs up!

  40. Comment by Francisco the Hybrid Cars Guy — August 29, 2010 @ 6:32 pm

    Awesome, that’s definitely what I was seeking for! You just saved me alot of looking around

  41. Comment by Melodie Houston — August 30, 2010 @ 6:48 pm

    Such an amazing article! I Genuinely enjoy Examining it, very good insights, the article is very ell-said. A thumbs up!

  42. Comment by Appendicitis — August 30, 2010 @ 6:56 pm

    I just considered i’d write and let you realize your personal blogs is handy for exposed the practical secrets.I honestly really enjoy your blog.Securely and effectively, the posting is in inescapable fact the most beneficial on this worth though topic. I concur with your final thoughts and will desperately search forward for your arriving changes. Only just saying thanks is not going to just be adequate, for your remarkable lucidity in your own advice. I will right away capture your rss feed to stay abreast of any updates.Actual deliver the results and considerably being successful with your give good results and organization interests.Regardless maintain up the decent efforts.Thanks.

  43. Comment by Deb — August 30, 2010 @ 10:31 pm

    Thank you for your nice words.

  44. Comment by San Diego photographer — August 31, 2010 @ 10:47 am

    I am so grateful for your article post.Really looking forward to read more. Much obliged.

  45. Comment by Trade Show Exhibits — August 31, 2010 @ 11:18 am

    Thanks a lot for the blog article.Really looking forward to read more. Fantastic.

  46. Comment by Laureen Mcpheeters — September 1, 2010 @ 6:55 am

    A Genuinely amazing Write-up. Many thanks for sharing you?e wealth of Information with us once Once Additional. It? no wonder your Weblog does

  47. Comment by Antonio Bryar — September 3, 2010 @ 5:31 pm

    Interesting stuff.. Would love to see more of this.. Awesome blog btw! Subscribed

  48. Comment by Deb — September 3, 2010 @ 5:39 pm

    Thanks for stopping by!

  49. Comment by Lil Wayne — September 4, 2010 @ 7:02 am

    I typically don’t comment on blogs but you have some good information material.

  50. Comment by croydon plumbers — September 4, 2010 @ 6:41 pm

    I am extremely new to the net and needed to read up on this subject. Thought it was a wonderful post very well written and informative. I will surely be coming back to your website to read more posts as i loved this one..

  51. Comment by Bard62 — September 4, 2010 @ 9:22 pm

    I definitely loved this brilliant article. Please continue this awesome work.

  52. Comment by ฟีโรโมน — September 5, 2010 @ 5:02 am

    It’s good to check out web sites with information and thanks for the discuss which you’ve got done. Mostly, I’m really surprised, but etc…

  53. Comment by discount outdoor lights — September 5, 2010 @ 7:18 pm

    Hi, I thought I’d drop you a line and let you know your page layout is really messed up on the Firefox browser. Seems to work ok in Internet Explorer though. Anyways keep up the good work.

  54. Comment by Deb — September 5, 2010 @ 9:01 pm

    Thanks. I tried it out now and it looked ok. Anybody else had such problems?

  55. Comment by Searscard — September 6, 2010 @ 4:38 am

    Hello. I absolutely did some web browsing and found this weblog. I walked as a result of this weblog post and it is really amazing.I actually genuinely enjoy your weblog.Perfectly, the piece of authoring is in assurance the very greatest on this definitely really worth whilst subject. I book-marked it and i’m looking ahead for your future weblog writes. I also seen that your blog site has some very good linking accomplished to it. I will correct aside get hold of the rss feed to stay informed of any posts. Wonderful info you acquired right here.Delight retain replace in your fantastic submit.Thank you.

  56. Comment by data entry operator — September 6, 2010 @ 10:52 am

    good post, added you to my RSS reader. Hope your link works in my FeedBurner

  57. Comment by albuterol sulfate — September 6, 2010 @ 5:23 pm

    Hi there, I set up your blog via Google while searching in the undoubtedly of blue ribbon grant-in-aid representing a callousness rebuke and your temporary looks damned intriguing for me

  58. Comment by Sears Employment — September 6, 2010 @ 9:54 pm

    I really like the way your website looks. I think it is top notch. If you dont care me asking, what theme is the blog? Thanks.

  59. Comment by Deb — September 6, 2010 @ 9:59 pm

    The theme is called “The Future of the Internet” (nice name, isn’t it?).

  60. Comment by SEO Techniques — September 7, 2010 @ 12:16 am

    Does this site correctly display emoticons? Because my site cannot :(

  61. Comment by Lyme Disease — September 7, 2010 @ 2:03 am

    I really believed i’d posting and let you realize your personal blogs is advantageous for unveiled the handy answer.I certainly love your blog.Most effectively and efficiently, the article is in possibility the top on this really worth although topic. I concur with your final thoughts and will consistently appear forward for your coming updates. Simply saying thanks won’t just be adequate, for the outstanding lucidity with your techniques. I will without delay get your rss feed to stay updated of any updates.Trustworthy do the job and substantially achievement as part of your deliver the results and organization endeavors.Anyway keep up the wonderful give good results.Thank you.

  62. Comment by Deb — September 7, 2010 @ 7:51 am

    I think it does.

  63. Comment by PCBC — September 7, 2010 @ 7:54 pm

    What an impressive information man. Thanks for sharing! However I am experiencing issue with your rss feed. Unable to subscribe to it. Does anyone else experiencing the same RSS problem?

  64. Comment by Nick Young — September 7, 2010 @ 11:22 pm

    good post, added you to my RSS reader.

  65. Comment by tvb — September 11, 2010 @ 8:39 am

    Thanks alot for this post …, It’s really informative, and looking forward to your other posts.

  66. Comment by Caridad Hoyne — September 11, 2010 @ 11:38 am

    I like this blog. If you need any FREE help in modifying your WordPress blog, just let me know.

  67. Comment by clean computer — October 9, 2010 @ 10:21 am

    Thanks for the post!

  68. Comment by Xenia Seeman — October 19, 2010 @ 6:03 am

    I have actually been attempting to get a hold of you how ever I can’t seem to locate the correct e-mail address …

  69. Comment by Deb — October 19, 2010 @ 8:41 am

    Contact me at deb@futurestradeblog.com

  70. Comment by Edythe Orris — December 1, 2010 @ 12:30 pm

    Hi, how do I subscribe to this weblog through mail to receive an email at the very moment you make a post?

  71. Comment by Deb — December 2, 2010 @ 2:33 am

    I just checked and saw it is really difficult to find the rss feed now. On the right column you see the section called Meta. In this section there is a link to entries rss. Follow that link and get to a page in which you can subscribe to rss feeds for this blog.

    I will try to add a simpler button soon.

  72. Comment by fontanny czekolady — January 6, 2011 @ 4:11 pm

    Thank you for this article. Waiting for another one.

  73. Comment by Raleigh Dilisio — January 8, 2011 @ 9:47 pm

    I am developing a blog and I am trying to find a brand new template.Yours looks pretty decent! Be my guest to visit my blog and suggest things!

  74. Comment by Ankle Cowboy Boots — March 3, 2011 @ 7:35 pm

    Found your site on Google, and I just wanted to say thanks for the info!

  75. Comment by Deb — March 4, 2011 @ 11:20 am

    Thank you!

  76. Comment by Sadie Witham — March 15, 2011 @ 5:20 pm

    Hi there, great article, will bookmark this for future reference.
    Cheers, Sadie Witham, Article Writer

  77. Comment by TV Wireless Headphones — March 21, 2011 @ 4:49 pm

    Hiya, I’m really glad I have found this info. Today bloggers publish just about gossips and web and this is really annoying. A good web site with interesting content, this is what I need. Thank you for keeping this web site, I will be visiting it. Do you do newsletters? Cant find it.

  78. Comment by Deb — March 21, 2011 @ 8:38 pm

    Thank you for your interest in my writing. No, I currently don’t have newsletters.

  79. Comment by tramadol — April 7, 2011 @ 8:05 pm

    Intriguing article. I realize I’m somewhat late in posting my comment but the article was to the actual and just the info I’d been looking for. I can’t say i go along with everything you could mentioned however it was emphatically fascinating! BTW…I found your website by using a Google search. I’m a frequent visitor for a blog and will return again soon.

  80. Comment by Forex Signals Service — May 30, 2011 @ 5:40 am

    An excellent list of money management in trading. Some people though will never be able to understand the importance of money management. so need to get signals sent to them in a service.

  81. Comment by Valery Pang — June 4, 2011 @ 12:29 am

    Do you have any videos on youtube about this?

  82. Comment by Deb — June 4, 2011 @ 10:07 pm

    Not yet. Thank you for the idea. I put some videos on youtube in the future. Thanks for asking.

  83. Comment by botox — June 22, 2011 @ 5:42 pm

    Outstanding content not to mention very easy towards fully understand story. How do I just do receiving agreement towards submit component of this page with my future news letter? Offering suitable consumer credit rating back to you typically the writer not to mention website link in the web site will not be considered trouble.

  84. Comment by mostafa belkhayate — August 12, 2011 @ 10:30 pm

    Great Blog! I’ll bookmark it! Thanks and bye!

  85. Comment by wild blue recovery act internet program — May 13, 2012 @ 12:58 pm

    I will right away seize your rss feed as I can’t to find your email subscription hyperlink or e-newsletter service. Do you’ve any? Please permit me recognize in order that I could subscribe. Thanks.
    wild blue recovery act internet program recently posted..1

  86. Comment by Deb — May 20, 2012 @ 5:27 pm

    The link to subscribe is up on the right, or here: http://futurestradeblog.com/feed/

  87. Comment by Rolando from visit their website — October 8, 2012 @ 12:19 pm

    Aԁmiring the time and energy yοu put іntο your blog and detаiled іnfoгmation you present.
    It’s nice to come across a blog every once in a while that isn’t thе samе unwanted гehashed
    material. Εxcellent rеad! I’ve bookmarked your site and I’m adԁing your RЅЅ feеds to my Googlе
    account.
    Rolando@visit their website recently posted..visit their website

  88. Comment by Mathias from Read More Here — February 10, 2013 @ 4:25 pm

    I have to thank you for the efforts you have put in
    writing this website. I am hoping to check out
    the same high-grade blog posts by you later on as well.
    In fact, your creative writing abilities has inspired me to get my own, personal website now ;)
    Mathias@Read More Here recently posted..Read More Here

  89. Comment by Gladis from real time s&p — October 9, 2013 @ 6:28 pm

    Yes! Finally something about emini forum.
    Gladis@real time s&p recently posted..real time s&p

RSS feed for comments on this post. TrackBack URI

Leave a comment

CommentLuv badge

This site uses KeywordLuv. Enter YourName@YourKeywords in the Name field to take advantage.