Here are some successful trading pointers that I would like to share with everyone. I like to use this blog to remind me as well as others who read my post about the things that we should do right when trading. Hence the reason why I set up this blog.
I believe that every trade must have a stop loss point. This forces you to commit to the idea that the “Market is always right” and that you can be wrong. When such a scenario happens, we must then go into the mode of protecting our capital by putting in a protective stop, hence the name. The stop is suppose to help us protect our capital without which we are out of the game.
Also, with a predetermined stop, it will give you more peace of mind knowing that you are only going to lose so much as indicated by your stop loss point. Also, the contract size that you trade is going to be determined by your stop loss point. For me, my stop loss point is determined by using Technical analysis. I will illustrate this on another post with charts,
So, how can we let our winners pay for our losers? Taking advantage of potential major winning trades is not only important to the mental health of the trader but is also critical to winning. Letting winners ride is every bit as important as cutting losses short. The reason is quite simple actually, if you don’t stay with your winners long enough to get yourself substantial profits, then it is unlikely that you are not going to be able to pay for the losers.
You should try to make yourself feel ok with taking multiple losses but ensure that that every loss is small in relation to your overall trading capital. Let me illustrate with an example. If you have capital of $10,000 and the amount that you are willing to lose is 1% per day, then you can only lose $100 per trade. If 1 point is a dollar, you can put a stop loss of up to a maximum of 100pips. Another way to go about doing this is by taking a 30pips loss per trade and therefore allowing you to lose up to 3 times in a day before calling it quits for the day.
Be willing to make mistakes regularly and also grain in your mind that there is nothing wrong with it. Making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money. This happens and never allow 1 trade to wipe out all your account. Most traders who wipe out their account lose it this way. They let a loss run to the point that it gets too big for them to take a loss. Then they never take that loss and end up losing everything.
So remember guys, cut your losses short and let your winners run.
Trading. The last bastion of freedom.