4. Risk Management Strategies

Paid to Take Risks

Remember you are paid to take risks. When you day trade, your financial goals are to make some premium to the risk-free rate of return. The risk-free rate is how much you can make without any risks.

An example is a US Treasury bill.

If you hold a 1-month bill for the entire month you will receive the return stated and have the full faith of the United States government as your borrower. There are several questions you should ask yourself when determining how to allocate capital to your day trading activities.

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