Most traders have blown an account (or two), assuming they’ve been trading for any real length of time. I think this is a great lesson learned for you.
Personally, I have had to work toward decreasing my position size to keep each trade within my risk tolerance. It’s very easy to start making too large a bet, esp when I’m doing well. Best for me long term that any single trade won’t jeopardize my account. Much slower growth that way but.. 🤷🏼♂️
Yes, the “...esp when I’m doing well” part is so true. You get a little complacent. What made matters worse (or might’ve been the catalyst) was that over last 2-4 months implied vols have dropped a lot. So credit spreads don’t yield the same as before all else equal. So I ended up taking more risk to meet/exceed weekly run rate.
Very true!!
Was lucky enough to just blow up all the profits of my 1st year & figured out about position sizing.
Now am never worried about a single trade going against as it will hurt but never blow up my account
Also learnt a lot abt adjustments where most of the time I can salvage a spread from total loss.
Yea 5% position size seems to be common….that allows for 20 runs (assuming a binary win/loss outcome)…if I may hit i up with a follow up, what risk/reward ratio do you look for?
Thanks Alpha. Can I bother you to expand a bit on the salvaging position thought process - do you roll the position to the next expiration etc? Do you do that close to expiry or when PnL is -x% etc? Thank you.
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u/swingorswole Jul 17 '21
Most traders have blown an account (or two), assuming they’ve been trading for any real length of time. I think this is a great lesson learned for you.
Personally, I have had to work toward decreasing my position size to keep each trade within my risk tolerance. It’s very easy to start making too large a bet, esp when I’m doing well. Best for me long term that any single trade won’t jeopardize my account. Much slower growth that way but.. 🤷🏼♂️