Allison Ostrander’s Strategy Selection Risk Gauge
In this post:
- Who is a conservative trader?
- What is Allison’s Trading Toolbox?
- How much of Allison’s account goes into new trades?
Allison is a more conservative-style trader, who likes to focus on growing small accounts by recycling the Risk Capital. Allison enjoys both intraday style trading (without the Risk of Day Trading) as well as longer term swing trades. Allison believes that no matter what kind of market we’re seeing, there is a strategy that can be applied to grow your account. Allison has built out her Trading Toolbox to succeed at trading no matter what the market throws at her. She watches the Charts and Options Chain for entry throughout the life of the trade until the Capital Risk has been covered or the trade is closed out.
Account Goals: To have an overall positive growth in the account each month and stack the profits to continue to grow the account safely.
Overall Acceptable Account Risk: For her own accounts, Allison has her own 25% rule she goes by. This is where Allison does not put any more than 25% of the account into new trades. This first 25% of the account is then divided to open multiple new trades when setups present themselves.
This does not mean that all 25% of the account goes into just one trade.
Allison takes another 25% of the account and leaves it as management for any new trade she may open or get behind on. Once again, this 25% is to be used not just on one single management trade, but for multiple management actions if needed for multiple trades.
This leaves the remaining 50% of the account untouched.
By doing this you know you will always have money and cash buying power available to you, and know that you have not overextended your account.
In the absolute worst case scenario, you lose both 25% of your account on new trades and 25% on management trades. You still have 50% of your account left. From there, you can look back at your trading plan to see where you may have made some mistakes or overextended.
Then you can decide to look at the original 50% left of the account and take 25% of that into new trades, 25% into management of new trades, and 50% of the remaining account is once again untouched, until you bring your account back to where it was when you started.
This is something Allison does for her own accounts. You must do what you think is best for your own accounts.
Strategy Rule Risk Taken Per Set Up: Strategy is determined by the Chart as well as the intraday movements of price and volatility in a particular Index or Stock. As far as the risk for the trade, refer back to the 25% rule above.
Methodology: Charts are key to method. Without charts, Allison would not know which strategy would be appropriate in the given market. After identifying the market type, Allison will go to the option chain and use a strategy that works with that chart. She will continue to use the Option Chain and Strike Price Manipulation to cover Risk, lock in further profits, or take management action on a trade that may have moved against her . Ideally she will continue to do this to lower or completely cover her Capital Risk for the initial entry of the trade.
Join Allison in her Profit Recycling Mastery for Live Trading, Real-Time Text Alerts and following along with updated trades to see what Allison has open and when: