[Cory2679]

Originally Posted by thalestrader »

Have you considered that with a 5K balance, you could halve your risk, and still reach your goal. A 2.5% risk (still heavy, but still .5% below cowboy levels) with a 10R weekly target is 25%. Now there are many who would balk at the "audacity" of a 10R/week goal. But it is achievable.

You've given me something to think about (thankfully I have the weekend).

Whatever I do, I need to stick with (at least for the duration of whatever "phase" I'm in of my plan). As long as I'm consistent, I'm happy. That way I can get a better grasp on what I can expect from my trading (whether it's 10R or -10R per week).

Originally Posted by thalestrader »

Also, be sure that should you suffer a string of losses, you reduce you size as your balance decreases. Your risk needs to be based on x% of closed equity, not x% of starting equity.

Thanks, will do.

[Cory2679]

Well, I've thought about it a little bit...

I think for phase 1 of my plan ($5,000 demo account), I'm going to stick with the 5% position sizing. I'm basing this decision on what I said here:

Originally Posted by Cory2679 »

...the way I'm looking at it is that if I'm having large enough drawdowns to where risking 5% per trade becomes an issue, I'm not trading well enough and need to work on that.

And it wasn't that 25% was necessarily my goal in the first place...it was more like "5R" was my goal...so whether that's 25% with 5% position sizing, or 5% with 1% position sizing, it doesn't matter to me...and if I can make 10R, that's great! 50%!

Also, I don't mean to limit myself to 5R or 10R or whatever...my true "goal" is infinityR...I'm trading for infinite yield.

Although, knowing me, now that my trading is "public" and I'm beginning my new plan and everything, I'll end up psyching myself out and losing big money my first week!

When it comes time to move from phase 1 to phase 2 ($500 live account), I will reconsider my position sizing.

Also...on another note...scratch this...

Originally Posted by Cory2679 »

I'll calculate the dollar amount for the risk based on the beginning balance of the account each week.

...just to be clear, what I now plan to do is calculate my position size for each trade based on whatever the current closed equity is on my account...not the beginning of the week balance.

[thalestrader]

Originally Posted by Cory2679 »

...the way I'm looking at it is that if I'm having large enough drawdowns to where risking 5% per trade becomes an issue, I'm not trading well enough and need to work on that.

This is a point at which you and I would disagree, and that's fine. To my way of thinking, if I am risking 1-2% and a period of draw down becomes large enough to become an issue, then I can reasonably conclude I am not trading well enough. But if I am risking 5% and the draw down becomes an issue, I can only reasonably conclude that my problem is too great of a risk of ruin, and I cannot reasonably conclude anything with respect to my trading other than my position size is too large relative to my equity.

Of course, George Lane used to trade a 5K account and routinely risk $500/trade day trading the SP's, so who am I to say anything? Of course, George Lane did not start out trading that size. And George could blow 5K (not that he ever did) and could pull another 5K out of his sock drawer to re-fund his account (He taught that you should never give more than 5K to your broker and that you should bring your profits home monthly).

I'm not trying to change your mind. Just wanted to share a differnet way of looking at the same situation that yields somewhat different conclusions from your own.


Best Wishes,

Thales

[jonbig04]

Originally Posted by Cory2679 »

Based on some advice from Dinerotrader, in jonbig04 fashion, I've decided to start my own log thread!

If anyone is curious about what type of approach I'm trading, just check out my history of posts over at the Reading Charts in Real Time thread.

I'll begin with my post from the Trader P/L 2010 thread that lead to me starting this log...

Awesome! I started my journal/log on day one and it really has helped keep me on track. I'm sure this thread will do the same for you. Best of luck and looking forward to following along.

[Cory2679]

Originally Posted by thalestrader »

This is a point at which you and I would disagree, and that's fine.

Well, if "you and I would disagree," then to me that's a red flag...you have "20ish" years experience and I basically have < 1.

Sooo...change of plans! I will risk 2% per trade!!

Hopefully I can average at least 10% (5R) per week trading that size...but like I said, I'm truly trading for "infinite yield."

I guess for the sake of my "plan," I won't count the week as "profitable" if I don't make at least 5% (2.5R).

I'm glad I made my initial post on Friday...there've been some serious changes to my plan over the weekend!

[MCM]

Look forward to following your trading.

I laughed at your comments regarding the wisdom of following some of the seasoned traders here - I feel the same way - surrounded by giants!

[thalestrader]

Originally Posted by Cory2679 »

Well, if "you and I would disagree"...!

Its a fine thing to disagree with me, as I am frequently wrong (just ask my wife).

There is a difference between risking 5% of account equity if that is all you have and risking 5% of equity/trade if you are sitting on 20x's that much in available risk capital sitting in a 30 day t-bills.

I know this is a demo account, but your goal should be the inculcation of good habits, not reckless ones.

While it is true that demo trading and live trading are vastly different, the truth remains that if you cannot demo trade profitably, you will not trade real money profitably. So trade this as though it were real; and furthermore, trade it as though this is the last 5K you can spare to lose before you quit the dream of being a trader and instead are forced to take a job as a telemarketer working in a cubicle somewhere in the center of a hundred other cubicles at your father-in-law's fertilizer factory cold calling farmers who can't afford to buy from you.

Trading for infinite yield requires sound money management and a soild, consistently followed trading plan. Do not confuse trading for infinite yield with trading recklessly.

Good Luck!

Best Wishes,

Thales

[MidKnight]

I agree with sir Thales there bigtime. Treat the demo trading seriously. My only other comment, and take it for what its worth.....is that you seem overly focused on making lots of money right now rather than working on skills. I mean obviously you are working on skills, but in public, its mostly just about money or 'infinite yield'. This impatience is understandable since that is probably what attracts everyone to trading and it is usually the main focus of new traders. From my own experience this was a self-defeating mindset. I'm not suggesting aiming for high financial goals isn't good, but in the end financial results are the product of the skills. Focus on the skills and the money will come. I feel this is where ones documentation and attention should lie rather than with pnl. But you don't see many public journals on this stuff because it exposes themselves and is highly personal. But on the other hand, posting journal with pnl can be ego boosting.

Absolutely zero disrespect intended Cory, I'm just jaw flapping and tossing 2 cents in the jar.... :2cents:

Warm regards,
MK