AT #29: $500 to $74,580 Challenge Week 13

Read time: 2 minutes

How many times have you seen your account wildly go up, only for it to vanish in just a few reckless trades?

You than start blaming your strategy, the stock market, or even pointing fingers at Biden.

Well, I can tell you that it’s none of those things. The problem is you altering with your risk size per trade.

In this email, I want to go over why risk size consistency matters.

In this Email

• Stats for the week
• Size does matter

Stats of the week

• Number of trades: 2
• Profit: +$197 PT
• PnL %: 0%
• Account value: $121
• Position size per trade: $500
• Cash position: $2,611
• Tickers: $QQQ

This week has been stress free, and I love it. When my setup did not present itself in the first 2 hours of market open, I would just close the laptop and go on about my day.

Friday was the only day I took a trade – which feels great – and it gave me a 50% return.

Now, to most traders, 50% return is a great return, but not to me. I want to find opportunities that net +100% return. To do so, it requires patience.

The contract did move to +100% after but my plan only accounted for 50%.

As of now, I will continue to paper trade for an additional week, since I do not have enough data on my new strategy modifications.

Risk size consistency

Look, here’s the bottom line, if you see volatility movements in your account, you know it’s because you’re over leveraging.

You went in very heavy into a trade, and the trade either skyrocketed your account, or it plummeted like a bag of rocks lost at sea, leaving you with a sinking feeling.

Your objective is to find high reward opportunities. However, when your risk size lacks consistency, your becomes dependent on your risk size rather than the r-multiple.

So if you kick off the week with $500 or even $1,000 per trade, maintain a consistent risk size for each trade. Heck, do it throughout the entire month.

Now, not every contract is equal, and that is understandably so. It’s okay to have a deviation of +/- 5%.

Here’s an example of the PnL ($) outcome with consistent risk size.

In the example above, you see a positive PnL ($) of $100.

But when you start altering the risk size, you’ll wildly different results.

If you want to protect your gains or your account, keep your risk size consistent on every single trade.