"Speculate with less than 10% of your liquid net worth. Risk less then 1% of your speculative account on a trade. This tends to keep the fluctuations in the trading account small, relative to net worth". Ed syketo
What made the experience so profound was i used 50% of my liquid net worth and 2% risk. Mind you, i took my time doing it, back-tested the system thoroughly for many years, forward tested the system thoroughly and then committed the amount. Knowing what DD your system can give and experiencing it are totally different thing.
I was ready financially to take the risk but not mentally, realisation came after a serious DD and massive massive mental pressure. Bottom line, no matter the system if you are not ready mentally to handle the risk it will become literal torture to move forward wit your trading plan, you ll go in massive self doubt, start tinkering wit your system or give it up on it altogether, it will literally become unbearable to execute trades. And if you are too emotional type then god help you, your mood will do summer- salt along wit your equity curve. Its a journey of self discovery and market will exploit your week points wit full force.
All this experience is on mechanical trading system, Its get even difficult for discretionary trader, they literally have to decide where to enter, exit, which trade to take or not etc, if one that they let go end up being a big winner it will throw them out of their zone completely, or worst if they are already in a bad mood and this happens. its a huge huge task to do on every trade cause already millions of things are going inside our mind and if you had get up from a wrong side of the bed this morning then its better not to trade that day.
"When i was making money i cannot wait for market to open, when i was loosing money i cannot wait for market to close". Book: What i learned after loosing a million dollar.
What ever i have written is nothing new and you can find it literally in most of the books and sites, even i have read most of the stuff when i was starting out but as the saying goes "akal badam khane sae nahi aate, thokar khane sae aate hai".
I ll pen down my feeling here, not in any particular order but as it comes to my mind... cheers
What made the experience so profound was i used 50% of my liquid net worth and 2% risk. Mind you, i took my time doing it, back-tested the system thoroughly for many years, forward tested the system thoroughly and then committed the amount. Knowing what DD your system can give and experiencing it are totally different thing.
I was ready financially to take the risk but not mentally, realisation came after a serious DD and massive massive mental pressure. Bottom line, no matter the system if you are not ready mentally to handle the risk it will become literal torture to move forward wit your trading plan, you ll go in massive self doubt, start tinkering wit your system or give it up on it altogether, it will literally become unbearable to execute trades. And if you are too emotional type then god help you, your mood will do summer- salt along wit your equity curve. Its a journey of self discovery and market will exploit your week points wit full force.
All this experience is on mechanical trading system, Its get even difficult for discretionary trader, they literally have to decide where to enter, exit, which trade to take or not etc, if one that they let go end up being a big winner it will throw them out of their zone completely, or worst if they are already in a bad mood and this happens. its a huge huge task to do on every trade cause already millions of things are going inside our mind and if you had get up from a wrong side of the bed this morning then its better not to trade that day.
"When i was making money i cannot wait for market to open, when i was loosing money i cannot wait for market to close". Book: What i learned after loosing a million dollar.
What ever i have written is nothing new and you can find it literally in most of the books and sites, even i have read most of the stuff when i was starting out but as the saying goes "akal badam khane sae nahi aate, thokar khane sae aate hai".
I ll pen down my feeling here, not in any particular order but as it comes to my mind... cheers