You know, I don't think most people realize how Zeev manages risk in his portfolio. After the close today if he gets back on line I'll have to ask him how big a hit percentage wise he would take, if like on a day like today he finds himself with say on average a buck loss in every stock he owes. Sure the dollar hit would probably be huge, but as a percentage of his total portfolio, taking a wild guess, say a 10% hit. Maybe max 20%. And it would be interesting to see how far back time wise that would set him back. In other words, how many weeks worth of trading would go poof.
What one has to realize, how one trades and handles the risk in a multimillion dollar portfolio is different from how one would trade and handle the risk in say a $25,000 (the minimum for daytrading) to a few 100's portfolio. And that would be different from a say $500,000 to few million portfolio.
I know one of the risk techniques Zeev uses is to .....diversify. What, a daytrader diversifying? Think about it. If, picking numbers out of the air, say you have $3 million plus, you can't daytrade the whole thing. Well I guess you could, but are you nuts? Beside, how much money are you trying to make a month? Zeev divides his portfolio into four. 25% for daytrading, 25% for swing trades (think daytrading in slow motion), 25% for core (remember we are in a BEAR MARKET, there is NO LTBH in a bear makert. Core means few weeks to few months, DEPENDING on market conditions), and 25% for special situtations.
So realize when Zeev is down to almost 0% cash, he isn't saying there is no risk in the market. His actual exposure and risk as a percent of his portfolio is probably still quite small. And because of his knowledge, experience, and tools of the trade, when he gets to 50-60% cash he is feeling naked, because his risk as almost zero, and again, that is as a total percent of his portfolio.
Now than can you do as Zeev to manage your risk. Maybe. How bigs your portfolio? This may be obvious, but all portfolios are not the same. Therefore you don't trade and manage the risk in them the same. Somebody in the $25-100+ range can't divide it up the same and expect to have enough to daytrade and handle the risk properly. If anybody is interested we could toss this back and forth and see if we can come up with some reasonable guidelines. There were some on the thread that recently hadn't figured it out, and got their fingers badly burnt. <ng> I figure that after 3 years (and eight months of following Zeev, which was the most important part so far in my education) I have finally passed daytrading 101. I'm now working on daytrading 201. <g>
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