In this post:
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- How is Henry making decisions about strategies and position sizing?
- What does trading with caution and patience mean?
Henry is a conservative trader, who specializes in creating a constant stream of income for himself, as well as making aggressive, directional plays when the situation presents itself. This is his overall theme when making decisions about strategies and position sizing. What kind of trader are you? Henry’s aggression level in any singular trade is determined by his technical analysis, perceived level of strength of the setup, overall market conditions, risk allowed per trade relative to his overall account size, and his account growth goals. Henry is a conservative trader, and he prefers to maximize his risk/reward ratio, and limit his risk. He trades with caution and patience, and meticulous technical analysis that he uses to select his strategies.
However, risk is always of utmost importance. The factors he looks at can give you a good idea about how you should manage your own risk, and select which strategies are appropriate for your account. At the end of the day, you need to know what is right for you.
Don’t forget – the relative risk of a strategy is also coupled with the position size you use when you place it, which should also reflect appropriately on your account size.
Risk Management at a Glance
Trading Style: Conservative Swing Trader – Income + Directional
Account Goals: Henry doesn’t like to think of an overall yearly profit, instead he prefers to think in terms of paying himself weekly income first, with growth as a secondary objective. As such, he automatically wires 1% of his account out each week into his savings.
Overall Acceptable/Recommended Account Risk: Henry has the following recommendations for position sizing:
- New/conservative traders – don’t risk more than 1-2% of their account per trade
- Intermediate/conservative traders don’t risk more than 2.5% per trade
- Experienced/aggressive traders never allocate more than 5% of your account on any one trade.
- Don’t have more positions than you can realistically handle.
- Henry typically will go up to 60% of his account allocated at any given time, but this risk is spread across multiple strategies that he places on a few different setups. For example, he will commonly place a combination of long calls, and put credit spreads and butterflies on a single setup of a daily squeeze.
Strategy Use + Risk Taken Per Setup: Position size & strategy utilized per trade are dependent on the perceived strength of the setup while keeping risk parameters in mind.
Methodology: Henry is a strict technical analyst, and his dedication to the craft along with his patience will teach you wisdom for years to come. He’s our pro when it comes to timing order entries, entering trades at the most favorable times having a steady hand. He utilizes a mix of premium selling plays, combined with more aggressive plays with heavier directional exposure the strength of the setup is worth it. He excels at teaching traders how to limit their risk, as well as scaling in and out to protect capital, and use the best strategies for their account so they can stay in the game until they can learn how to be successful.
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