Risk Management

1. Control Share Size
Start with small share size for a few months till you get constant winnings.
Then adjust to higher share size and continue till get constant winnings.
If get confused or start losing, adjust to lower share size.
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2. When in Doubt, Get Out immediately
Flats are Winners. Never mind the commissions.
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3. Know when NOT to enter trade
Don’t get in if the stock goes IRRATIONALLY high or low.
- If it goes too high, it will turn back.
- If it goes too low, there might be some problems with company.
No positions before market open
- Enter only 1 hour after market opens.
Use extended time for exits (5.00-5.05pm)
No positions before major market announcements.
Avoid volatile stocks.
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4. No Cost Dollar Averaging
Only for value investor
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5. Don’t Overtrade
Plan your trade, trade your plan.
Define in your plan how much you want to trade in a same time period.
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6. No Doubling Down
Only for gambling
Need unlimited capital size
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7. Have a Loss Limit
2% of Risk Capital
Stop trading once Loss Limit have been reach and reevaluate trading system
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8. Be Logical, not Emotional
Be unattached to the outcome of your trades
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9. Don’t trade if something wrong with systems
Slow quotes
Jamming
- Go through checklist for tools operation condition (equipment maintenance checklist)
Sick
Thoughts distractions
- Still keep in touch with market but don’t trade
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10. Be Disciplined
Have trading rules.
Have trading plan.
Review trading plan and positions.
Stick to fixed schedule for important activities.