(SIM)I'm starting to have more green days, but...

[Teruki 21]

Hi,
Thanks to a lot of advice and education I receive here, I am gradually getting better and starting to have more green days after 2 months of training on SIM.
This is great, however I am facing some "difficulties."

When I go live, I am planning to put in about $20,000. My goal would be $200 a day. I currently risk $20 per trade using Kyle's hotkeys and aiming for 2R($40). When the movement of the stock is strong I let it run and get 3R or even 5R when it is great. Sometimes I cut it short at 1:1 or less, or get out at break even, but for the purpose of this thread let's say I get 2R on average when I win . When it is good, my win/loss ratio is 1:1. So, I would be getting $20 every two trades I take.  This means I have to take 20 trades to reach my goal per day. As I said it is when I am doing good and I am taking way more trades than I want or should when I'm not doing as great, although I can often still keep it green. Sometimes I reach $200 but a lot of times I don't and even If I reach it, the commission would be way too high.  I would like to cut down on the numbers of my trades per day and still reach my goal but as I mentioned at my winning rate and risk, it would take 20 trades to get to my goal even when I'm doing good. My calculation above is not accurate but it is more or less what is going on. For example, 25 trades, 10 wins, 15 loses, $100 profit (minus the commission).

I don't know what to change or focus now. Here is what I thought.

(1)My wining lose ratio is too low.  I should aim for a 2:1 ratio.  However, even with this ratio, I would need more than 10 trades to get to my $200 goal with a $20 risk.

(2)Maybe the average 2R for win is not ideal and I should aim higher.

(3) Maybe the $20 risk is too small for the $200 goal (or the goal is too high for the risk). When I go live I can start small but ideally the risk should be higher for the goal (like, $40)?      

I guess I can keep practicing and get a better winning ratio or a better average R, but I wonder what I should focus on at this point.

Thank you!

[Justin 264]

Hey Teruki,

While everyone should only risk what they are comfortable with, I will say (from my personal perspective), that your risk is conservative for the goal you want.

Ideally you shouldn't be risking more than 1% of your equity (which happens to be $200 in your case), so maybe you could possible risk 0.25% ($50) per trade. Giving you 4 solid trades to make your goal.

Even if you are 50/50 for the day and you hit 2R on your 2 winners, that's still $100 for your day. Not bad!

 

[Teruki 21]

Thank you Justin.
I guess you are right and I am being a bit too conservative. 
Maybe when I actually go live I will start with a $25 risk and set a goal at $100, then after I get better/become comfortable I will increase it to a $50 risk and $200 goal.

BTW I really appreciate the help you have given to me on this forum.
Really helping me a lot! 

[Justin 264]

Happy to help Teruki!

Once last piece of advice though - Practice now with exactly what you will have in equity and what you will risk when you go live. The less variables you have to change the better. Going live is enough of a challenge on your psychology; best keep the technicals as consistent as possible! 🙂

[Brad 18]

A goal of 4R per day seems a bit of a high goal to me when you are starting out live trading. But maybe that's because I like to use fairly wide stops compared to others (from what I can judge). Your trading style might end up changing a bit when you go live due to the realities of putting real money on the line, how you get filled and so forth. 4R might be fine for you if you have fairly tight stops and it's not uncommon for you to get a 4R run on a winner.

When you start trading live you will want to work toward being consistent and having monthly stats that are acceptable to you and reflect discipline and positive progression. At 4R/day, minus a few losing days, that would be a pretty high number. I think that even a 20R month is quite impressive for someone starting out. Heck, even just being positive at all is good news, so keeping the goal modest and within reach on an average day I think is a good way to do it.

Good luck!

Edited June 7, 2020 by Brad
added a qualifier word for clarity

[Teruki 21]

Thank you again Justin, and thank you Brad.

Justin - OK, thank you again and I will definitely keep that in mind and proceed!

Brad - I didn't really think about how many Rs should be my goal - I calculated  it to be 1% of what I have in my account but I may want to think it again from the point of view of the risk I want to take. Of course I know (or hear a lot from other traders say) how live trading is different from the SIM, but it seems like so far I reach 4R often (which is $80 for me with my $20 risk). I will see how it goes with the SIM if I raise my R, and work toward going live. 

Edited June 7, 2020 by Teruki