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In this webinar, we did a Q&A and some good questions pertaining to trader development were asked. One trader asked, âWhat is an appropriate amount of leverage to use?â When thinking about leverage it is a good idea to think about it in terms of amount risked per trade, and then the leverage will adjust dynamically. For example, letâs say you are willing to risk 1% of your capital on an idea, then your leverage will be dependent on how far away your stop is placed and what the possible loss amount would be in terms of capital, not the leverage figure. This means your leverage will vary from trade-to-trade depending on the distance your entry is from your stop.
Another trader asked, âWhat is a strategy for helping myself to avoid chasing a trade?â The obvious and clichĂ© answer is, âbe disciplinedâ. And while it is true that you need to be disciplined, there are ways to help ensure you are in a disciplined mindset. Think of trading mistakes, in this case âchasing a tradeâ, from a risk/reward, or pain/pleasure perspective. If you find yourself chasing trades, or making any other type of trading mistake on a consistent basis, then before you put yourself in a position of making a mistake think about how you will feel if that mistake doesnât work out. Youâll probably realize prior to the committing an error that you will be kicking yourself later if it doesnât work. And if it does work the pleasure you get from the winning trade on a mistake is almost certain to not be as significant as the pain you will feel if it doesnât work.
There were a number of other good questions which we addressed, for the full conversation please see the video aboveâŠ
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---Written by Paul Robinson, Market Analyst
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