-
I never want to lose more than 1% of my total trading capital in any one trade. I try to put on position sizes where the worst case scenario is a dollar loss equal to no more than 1% of my account. I want to risk 1% to try to make 3% on my capital. My stop is where the price has to go to prove me wrong.
-
My maximum risk exposure is 3% of my capital exposed to loss if all three of my positions go against me completely. I do this with both correlated and uncorrelated assets and positions. I try to ensure my worst day trading would be a 3% total draw down in trading capital.
-
I try to limit my total draw down to 5% of my trading capital if I have five losing trades in a row. This very rarely happens, becasue I will trade smaller and smaller and only trade the very best high probability set ups if I get near this parameter.
-
While I keep my down side limited I keep my upside unlimited I love a great entry that allows me to hold a winner and I will at times hold a winning trend trade for a week or a month if it trends well.
-
I always first and foremost focus on what I can lose not on what I can make when I enter a trade. This has served me well as in growing capital over many years of trading.
