This is in a few words, my strategy and mentality when trading. Enjoy.
• Max risk per position 0.5 % of closed equity
• Must not exceed 2.5% of closed equity in open trades
• Have a lot of confluence in your trades, minimum 2 indications and major areas + S/R and price action.
• First priority should be risk management, always cutting risk when you can, which is moving your SL closer
• Always assess which quality type a trade is, and risk accordingly.
• Always plan your trades from A-Z, with SL's well planned behind possible support/resistance zones. How far you think your trade is going, I for example use technical analysis and have many confluences in a given trade. i.e. MACD divergence + swing high + pinbar sticking through good price pivot zones, a few MA's or big round numbers.
• My second priority when I have cut the risk on a trade to break even, only then I focus on managing the trade for profit.
• Trading psychology. When I trade, I am constantly reviewing my thoughts. Analyzing what I'm thinking and why I'm thinking it. This helps me tremendously in staying focused and keeping my emotions effecting my decisions. for example. 'why do I want to set the stop loss here?, is it too tight? am I being too greedy? am I setting it too tight because then the compounding on the position sized trade will be so great (greed) but with the SL at a vulnerable area... or at a protected area behind ma's, BRN or zones? as stated above. These are questions and more I ask my self constantly when making trading decisions. In short, keep your emotions from effecting your trades.
• Don't worry about losses.. They are half the fun. It feels great cutting risk by half from 30% to 15% and then the trade turns around and hits my stop loss. Because I have cut my losses short! I am often making my losses small. And that feels good.
• Don't have unrealistic expectations.. Don't expect to make 25% a month consistently without the inherent risk. I look to make 5% a month, but would gladly accept 0.5% even. I have heard prop firms look that traders make around 2% a month consistently. Don't you see? its about low draw down, low risk, consistent returns. Not the 25-50% a month.
I thats it in a nutshell. How I trade. It is all about risk management for me.
Best regards, Stefan.
A person is only limited by the thoughts he chooses.