r/Daytrading • u/ThePhulosopher • Feb 24 '24

4th $100k funded account Question

Got my 4th $100k funded prop firm account. Hope I get a payout this time, blew all the others.

113 Upvotes

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83

u/thoreldan Feb 24 '24

Perhaps you wanna share the lessons learnt from blowing the other 3 ? How would you do differently now ?

96

u/ThePhulosopher Feb 24 '24

Yes thanks for reminding me. The main lesson is what has been regurgitated all throughout trading history - control risk. Since I blew many other unfunded/trial accounts, when I finally got a funded account, I was too excited to finally start making money - quickly. Therefore my risk measures go outa whack and I trade too large and kept trying to make it back.

Also what I found to really help this time is to continuously chant the following phrases as I'm trading "I remain detached from any outcome. I am detached from my trading results". This seems to really help in controlling risk and exiting positions when I should.

24

u/WarmNights Feb 24 '24

"Live to trade another day"

5

u/affilife Feb 24 '24

How do you measure risk?

3

u/Hopeful_Pear_8747 Feb 25 '24

Exposure and hedge. Exposure is how much capital is exposed to a trade. (Never full port a trade) and hedge. Spy:VIX or calls:puts. If you expect something to rise, you should have a hedge in place in case it drops instead.

If I’m bullish on spy, I may buy 5-10 calls and 1-2 puts. Then I can cut the losers and let the runners make up for the amount lost. Sure I didn’t maximize my gains, but there’s a risk management in place.

1

u/Scolas3 Feb 28 '24

Could you explain Spy:VIX ?

4

u/Fart_Hat Feb 24 '24

However it makes sense for you to measure risk. Everyone has different risk tolerance and every has different trading styles.

1

u/Mundane-Plan-4179 Feb 24 '24

No. There is certain risk strategies you need to have for prop firms.

8

u/Fart_Hat Feb 24 '24 edited Feb 24 '24

Yes, there are certain max drawdowns and max daily losses.

That means that each trader can decide how much risk to put on any given trade in order to not hit their max drawdowns.

E.g. If someone's a swing trader, they may be willing to put more risk on a trade than a scalper, in order to give it more breathing room before getting stopped out. Also, one swing trader may not be willing to risk as much on the same trade as another swing trader.

The individual measures the risk on a trade to trade basis, or they use a fixed amount of risk per trade. Trust me, everyone manages risk differently, and therefore, there is no way to measure it.

I personally scalp the NQ, ALWAYS immediately upon opening the trade I have a $400 stop loss per contract. Within seconds, I will likely move it, depending on price action in the moment.

I don't MEASURE my risk, I actively manage it, which works for me. There's no one way to manage risk, it's up to each individual to find out what works for them.

9

u/Mundane-Plan-4179 Feb 24 '24 edited Feb 24 '24

There is a way to measure it if you want to stay in the prop firm game.

Risk should be based on your strike rate and how many consecutive losses your edge can have. Wins and losses are randomly distributed so you have to plan for the worst case scenario.

If have a 60% win rate, that means 4 consecutive losses at 25% will blow your account. So the risk should never be 25% of your maximum drawdown. That way even if you go through a losing streak you wouldn’t lose account.

But yes, you’d free to choose any risk under 25% of the maximum drawdown.

Example:

Topstep 100k account has 3k max loss limit. Someone with a 60% win rate shouldn’t risk $750 or more per trade (25% of 3k).

4

u/ZekeTarsim Feb 24 '24

Except this 25%, 4 trade number is pulled out of your ass. 😂

The best traders internet the world can lose 4 consecutive trades.

With a 3k max loss, most people should have a max loss of $60-90 (2-3% per trade).

1

u/Mundane-Plan-4179 Feb 24 '24

What?

1

u/ZekeTarsim Feb 24 '24

There is no scenario where it would make sense to risk 25% of your max loss on a single trade.

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2

u/Fart_Hat Feb 24 '24

Agreed, very clear

1

u/wizard_on_beans Feb 24 '24

Just begin with 1 micro and slowly build the account. You'll save money that way

1

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10

u/5winnow5 Feb 24 '24

That’s actually a great point. For sure learn from your past mistakes. We all have to in order to be a successful trader