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Monday, April 27, 2009

Challenge Project Trade

I had a small loss today in the Challenge Project accounts of 3 points in SBN9 (14.02 to 14.05)

Now I already initiated the deposit for May's numbers (I'll have that blog entry probably tomorrow). So the balance, to that point, was $1,475.02, as I had already added $60.00 and it cleared pretty quickly.

When I saw the trade move against me, I instantly cut it, regardless of what would happen in the future. The name of the game is capital preservation. So the account now stands at $1,422.92. The Drawdown kill switch has been hit, which means that we will follow the money management strategy we came up with, and not trade again, until the next deposit from Rule #2 when the account will stand at $1,522.92. However, since I kept the loss very small on this scalp? (The risk reward was 1:1) Then our account equity is still higher in May, than April's account equity of $1,415.02.

I ended up a bit whipsawed? That will happen to any trader from time to time. But at the same time, the capital was preserved. Money management.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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