Trader J's Inner Circle Message Board

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Strategies & Market Trends : Trader J's Inner Circle

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Dec 12 9:30 AM EST

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To: Jon K. who wrote (10671)	3/6/1999 1:38:00 PM
From: Ron McKinnon	Read Replies (2) of 56535

Jon TJ gave some great thoughts let me toss out a few of my own >>>You asked me about goals. But when I stopped and think about it, I did not have any goals other than make as much money as possible. I have no idea how I should set goals. (I guess I would be very happy if I can average $300/day) if you are a full time trader I think goals are critical; they set the standard for your activity >>>My trading capital is about 50k each for trading and IRA accounts. As you know IRA is for cash account only. I do not trade this account too often. (a month to a year term). With trading account I use margin so I can use up to 100k. I try not to exceed 20k on any one stock. if you ask 10 people what is the "right" amount of equity to day trade you will get 12 answers I've tried various sizes and at least for me 50-100k seems to work the best, for me; in a pure day trade account too small and you really can't trade "right' too much and you tend to "push" trades I think 25k is a minimum and 200k the max (based on how I trade)others with different styles will say more or less you say you would be "happy" with $300 a day off of a $50k equity account that's 75k profit a year; a 150% return assuming you take out profits and do not compound your equity (by the way, I write myself a paycheck out of my trading account every Sat; this is my job; it makes it real; I suggest everyone do this) so 300 a day is 1500 a week or 3% on your equity you see people post how they get returns MUCH greater than this possible, but not likely over the LONG term, ie, 5-10 years or more my own feeling is the a CONSISTANT return of 1.5-3.0% a week is doable for the highly disciplined trader my personal target in my day trade, margin account is 2% I have consistantly exceeded this for over 5 years but all my trades are oriented around this goal to try for more is to invite disaster; I think at least for the first few months/years at this CONSISTANCY is the key if you break the rules and get lucky it is very easy to have a 10-20% day just as easy if pushing the edges of the envelope to lose that much or more so to be consistant one needs to be conservative a few possible "rules" a true day trader goes "flat" at every close; most of us do a combo of day and short term position trades 1. No margin usage overnight; ever; period 2. No more than 33% of your EQUITY in any single stock 3. Never lose more than 2% of your equity on any single trade (that means with 33% and a 2% loss you can take a 6% loss on any single trade) 4. If you lose 2 days in a row, take a day off to re group 5. If you lose on a weekly basis; 2 weeks in a row; go back to the basics; re think your trades; go back to trading with half the amount you used in the past 6. For a position trading account, as an IRA, use an average of 8-12% of equity for each position this will give you 10 or so stocks on average to get diversification 7. If in doubt go small; either on positions or $ goals those are a few off the top of my head I am going to boot up my other computer and dump some stuff from my hard drive on here I've posted most of this on other threads in the past but it may help you as well as me to re read them

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