Read Your Trading Rules Everyday
Reading trading rules
Too many new traders think that because they have $25,000 equity in their trading account that they somehow have the right to trade five or ten e-Mini S&P contracts. This cannot be further from the truth. If you can’t trade a one lot successfully, what makes you think that you have the right to trade a 10 lot? I want to have a track record of trading profits over the course of ten consecutive trading days trading a one lot only. When they have achieved a profitable ten-day period, in my eyes, they have earned the right to trade a two lot for the next ten trading sessions.
Remember: if you are trading poorly with two lots you must lower your trade size down to a one lot.
You are not a bad trader because you have a losing trade on. You are, however, a bad trader if you do not get out of the losing trade once you recognize that the trade is no good. It’s amazing to me how accurate your gut is as a market indicator. Reading trading rules if, in your gut, you have the idea that the trade is no good then it’s probably no good. Time to exit. Every trader has losing trades throughout the session.
Follow your Trading Rules
Once you come to the realization that your trade is no good its best to exit immediately. It’s never a loser until you get out and not to worry, it’ll come back, are often said by traders. Once the phrase is stated, it is an affirmation that the trader realizes that the trade is no good, it is not coming back and it is time to exit.
Big losses prevent you from having a winning day. They wipe out too many small winners that you have worked so hard to achieve. Reading trading rules big losses also kill you from a psychological and emotional standpoint. It takes a long time to get your confidence back after taking a big loss on a trade.
Just as I don’t know of any successful speculators, I don’t know of any trader who goes into a trade expecting to hit a home run and then actually having it happen. You should never approach a trade with the idea that it’s going to be a homerun winner. Reading trading rules, sometimes they turn out that way, but the times that I have a hit a home run on a position is most definitely luck, not skill. My intent on the trade was to produce a small winners…