So I've gotten a few requests to talk about risk management. To me this is one of the most important if not the most important part of trading. Controlling your risk and capital is vital to any daytrader. 

For me I actually go into each trading day fearing losses. With so many tickers and setups to trade the last thing I want to do is put on a trade where the odds are not greatly in my favor. I try to avoid boredom trades at all cost. Also when I put on a trade I usually like to be in the green immediately. If I place a trade and I'm immediately red it usually means my entry was not that great. There are times though when I'm building a position and I don't mind a trade going against me for a short while. 
Sometimes when things are slow it is very hard to be patient enough for the perfect setups. By having a mentality and thought process that fears to lose money it helps me only place trades where I'm very confident I will be successful. 

After trading for nearly 10 years I know I can make money in the market. I know those golden setups will occur that just seem almost too easy. The problem is sometimes those setups do not happen all that often. Sometimes great trades can occur daily or weekly. Other times you may have to wait a few months for them. Again when I talk about great setups for me personally it is PLUG at 11 DGLY over 30 ISNS over 9 ect. These are setups that I have a fair amount of confidence in and where a majority of my money is made. 

So with that being said let's talk about risk management. I have already stated I go into each trading day fearing losses. This helps me wait for the good setups and avoid boredom trades. Being that these perfect setups usually do not happen on a daily basis that means you are now looking for secondary trading ideas or maybe even scalping. Now when I say scalping I do not mean trying to make .05 on a trade. Maybe 50 cents or a dollar depending on where the stock is trading. My risk management is different depending on how great of a setup it is. If it is a normal day and I'm just trying to scalp something my max loss might be 500-1000 dollars. If I see a stock like ISNS at 9.50 which I believe has a great chance of moving 1-2 dollars on the downside I may risk 5000 or maybe a bit more. The amount of money you are willing to risk all depends on your account size and the potential reward.  Also for me to minimize my risk it is not uncommon for me at all to get in and out of a trade 3-4-5 times before it finally cracks. Again by having a mentality that fears losses I try to never let a trade get out of hand. If I start to get squeezed and I don't feel comfortable I just get out. I can always re-enter when the stock starts to show weakness. Yes sometimes I pay a few more dollars in commissions then I would like but it has saved me from some massive losses.

Take ISNS for example I was short 25K sept 2nd at 4 dollars. It started to run on significant volume over 4.20 and even though I hated covering for a  5k loss I did. The next morning it opened over 9 and almost hit 10. That's when I shorted again and held for some decent gains. Even though I felt strongly it was a good short near 4, the price action told me otherwise and I covered to re-short much higher. So many traders have blowups because they are too stubborn to take a small loss and it ends up wiping them out. I try to never let my emotions get in the way. No matter what you believe about a company good or bad, price action tells all. If you fight the trend you will lose.

To summarize a few points, your risk all depends on the potential reward and account size you are dealing with. I personally will not let any loss be greater then 10% of my account size. If I take a big loss like that I almost consider calling it a day and coming back the next morning with a fresh start. The last thing I want to do is feel forced to make back the money I just lost. That can be dangerous and the losses can snowball from there as you are not thinking correctly. In this business if you do not have good risk management you will not last long as a trader.