Is this a good way to reduce risk in Day trading ( Strategy speaking)?
Asked by: Trader 157 views Day Trading
Would this be considered a safe goal to gain 2 percent profits from trades? I research stocks that doesn’t have much volatility.
Say a stock is trading at 17.80 and the High/low is around 18.50/17.20. To make 2 percent out of the current stock, I need to gain 35 cents. The risk I’m willing to take is 5 percent which is 88 cents which I will sell no matter what. So at 17.80, the stock would have to plunge to 16.92 before forcing to sell. Chances are I will see a 35 cent gain before a 88 cent dip. I know the profits is a lot lower, but the percentages is not against me.
Will this work with stocks that are stable at the moment? 2 percent gains happens very often in high volume stocks and 5 percent drops happen a lot less often with stable stocks.
What do you think? For example. Citibank is a good example. If you look at the chart for the past 2 days, you will see that it hits 2 percent a lot and there wasn’t any 5 percent drops if you bought it at the middle of the high/low price.
If there’s any chance that I took a 5 percent loss, Im done for the day and I’ll try again tomorrow. I think discipline is really the biggest key. I’m not looking to triple up my capital in a week..
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