4. Risk Management Strategies

Systematic Day Trading Risk Management

A systematic approach to day trading means that you avoid overriding a trading alert. Using this approach removes some of the human element which can interfere with the strategy’s success. The risk management of a systematic approach can be back tested to determine if the approach worked in the past.

There are several benefits to using a systematic approach. Back testing a sample of data can provide you with the confidence that you need to execute a trading strategy. Once you are comfortable with a back-tested day trading strategy, make sure you test it using real-time data before you begin to risk real capital.

You also might want to consider using a paper trading account to practice the strategy and make sure it is profitable.

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