Welcome to the Traders Laboratory.

Money Management Risk and money management related topics.

Reply
Old 06-03-2015, 08:35 PM   #1

Join Date: May 2015
Location: Reno, NV
Posts: 19
Ignore this user

Thanks: 0
Thanked 2 Times in 2 Posts

Finding Proper Entry to Eliminate Emotions

Getting the proper entry is a major part of becoming a successful trader. Big loss's lead to emotional trading, which in term leads to more loss's. With the proper entry that offers you a good risk vs reward ratio you can minimize your risk while allowing the best possible reward.You should never lose more than 2% of your total capital on any single trade.Following these two simple rules will allow you to define your risk as a trader and allow you to remove the emotional stress that trading can force on to you.

Every chart has to be read differently and I don't think there is just one strategy that works for every stock. But I base my entries off good risk to reward. 1:3 or higher. So when I find a chart that offers me at least 1:3 risk to reward ratio. I make sure that my stop can be placed low enough that the stock has room to move, so I don't end up stopping out early. But not risking more that 2% total capital.

Example would be $COWN



My Idea on this stock was to take advantage of a major sell off or large dip. There was strong support in the 5.45 area as well as the 50day sma that was holding up. The yellow circle represents the day I started my swing at 5.50. The Red circle represent our previous low of 5.39 an area we could place our stop to define our risk. The green circle is our target at 5.95, our previous high as well a strong resistance area. so in term we are risking .11cents with a possible .45cent reward to giving us a 1:4 risk:reward ratio. Once my risk is defined I figure out how large of a position size I can do based off only risking 2% of my total capital. If a chart can not offer me these two things together then for me it is not a good entry point.
EatSleepTrade is offline  
Reply With Quote

Reply

Tags
emotions, position size, proper entry, risk vs reward

Thread Tools
Display Modes Help Others By Rating This Thread
Help Others By Rating This Thread:

Similar Threads
Thread Thread Starter Forum Replies Last Post
Had a Hard Time Finding Proper Set Ups Today MichelGJulien Futures Trading Laboratory 7 11-15-2013 09:18 PM
Passionate Talk About Trading for a Living and Eliminate High Risk Trades daytradingradio Trading Videos 0 05-07-2013 06:02 PM
My Emotions mohsinqureshii Trading Psychology 12 08-26-2012 01:55 PM
To Eliminate Repeated Trades (EL) GRANDEUR Coding Forum 1 11-02-2009 04:28 AM
Emotions While Trading james_gsx Trading Psychology 53 11-19-2008 11:01 PM

All times are GMT -4. The time now is 12:51 PM.
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
CS to VB integration by DeskLancer
2006-2011 Traders Laboratory, All Rights Reserved.