Identifying And Exiting Losers - Day Trading Advice
The majority of traders are looking for entries with a very high probability of success. Web sites and book stores are loaded with day trading advice to fill this "need." Some of it's pretty good entry advice. A lot of it is average, which is actually not a good thing. But good or average, if they are leading you to believe that "If you can find better entries, you'd be making money." Than this is poor day trading advice, it's a lie and they are taking your money and they are taking you for a ride.
Those are thoughts I had almost every day, before I quit the safety of full time employment and decided to strike out on my own. I asked myself the same question day in and day out; surely there has to be a better way. What about the internet, I wondered, isn't that supposed to be bringing new and exciting opportunities to all? I researched a lot of so-called work-from-home opportunities that promised untold riches, apparently mine for the taking just by sitting in front of my PC. Needless to say, in reality those schemes turned out to be about as fulfilling as, well, filling envelopes for a living. No, I knew there had to be another way - something real - something where I could be in control of my own destiny. And then one morning on the train to work, I read about a couple of Wall Street boys who had struck it rich thanks to some huge bonuses, and was now going it alone setting up their own day trading shop.
That was when I discovered day trading, and I realised that this was exactly the opportunity I had been searching for. I decided there and then that I was going to make a full time living from the stock markets, whatever it took to succeed. The advantages of day trading as a job are numerous to say the least; there is no boss to answer to, no customers to satisfy, no suppliers to let you down, no waiting for invoices to be paid, I could go on. In fact, I will: trading is a location-independent activity - I can work from anywhere with an internet connection, which effectively means anywhere in the world with a telephone line. I regularly trade from my laptop whilst travelling. I can trade when I feel like it, and take time off when I like, which means I can spend quality time with my family.
I know of a couple of traders that don't think twice about putting 40 or 50% of their account on the line every time they open a position. Well all it takes is two or three bad trades in a row and poof they are finished, account busted. Let's look at some numbers just for the same of argument. I like to trade the S&P Emini, each point has a value of $50.00 so if I set a stop for 2 points, trading 2 contracts I am willing to risk $200. Using my rule it would mean that I want at least $4,000 in that account to open that trade. I know that might sound like a lot, but trust me on this it's more than possible to have four or five bad trades in a row. Then what? Well then you dig out those want ads again.
Which brings us to most asked question number two, losses. Yes everybody has losses, I do, you will even the most experienced trader on the planet will have losses. The sooner you accept that and move on the better off you will be. You can't beat yourself up over having a couple of losses. Try not to look at them as losses, look at them as business expenses. They are just a part of doing business, nothing more nothing less. You could see a market that looks setup perfectly to make a move all the planets have aligned and sure enough you jump in and get your fill. Only to have the market turn the other way and take off like a Jack Rabbit, it happens far more often to us than most traders would like to admit. You can't take losses personally you can't try to trade your way out of them and you can't control when they are going to happen. So just don't beat yourself up, take your loss chalk up to a learning experience and move on. Sometimes there isn't even anything to learn. You made the right move everything looked good, the market just turned. It will do that more than you care to think about.
Most asked question number 3, what's the best system for trading? Well the best system for you is your system. Let that one sink in for a bit. There are as many systems out there as there are traders. They aren't all perfect and what works for you might not work for me or anything else. The one thing I can tell you, there is no holy grail of systems. They all can be used by just about anyone; they just all need the personal touch of the user. A system working for a week or two or eight does not making it a winning system. All systems have their good and bad points; none of them seem to work in all markets. There is so much to choose from between systems and how to use them I think I'm going to make that a topic for an entire newsletter all by itself. The bottom line about systems is to do what works for you, learn what you like. Do you like swing trading, scalping, intra day...whatever you like there will be a system you can buy to get you started down the right path while you figure out all the nuts and bolts.
Those are thoughts I had almost every day, before I quit the safety of full time employment and decided to strike out on my own. I asked myself the same question day in and day out; surely there has to be a better way. What about the internet, I wondered, isn't that supposed to be bringing new and exciting opportunities to all? I researched a lot of so-called work-from-home opportunities that promised untold riches, apparently mine for the taking just by sitting in front of my PC. Needless to say, in reality those schemes turned out to be about as fulfilling as, well, filling envelopes for a living. No, I knew there had to be another way - something real - something where I could be in control of my own destiny. And then one morning on the train to work, I read about a couple of Wall Street boys who had struck it rich thanks to some huge bonuses, and was now going it alone setting up their own day trading shop.
That was when I discovered day trading, and I realised that this was exactly the opportunity I had been searching for. I decided there and then that I was going to make a full time living from the stock markets, whatever it took to succeed. The advantages of day trading as a job are numerous to say the least; there is no boss to answer to, no customers to satisfy, no suppliers to let you down, no waiting for invoices to be paid, I could go on. In fact, I will: trading is a location-independent activity - I can work from anywhere with an internet connection, which effectively means anywhere in the world with a telephone line. I regularly trade from my laptop whilst travelling. I can trade when I feel like it, and take time off when I like, which means I can spend quality time with my family.
I know of a couple of traders that don't think twice about putting 40 or 50% of their account on the line every time they open a position. Well all it takes is two or three bad trades in a row and poof they are finished, account busted. Let's look at some numbers just for the same of argument. I like to trade the S&P Emini, each point has a value of $50.00 so if I set a stop for 2 points, trading 2 contracts I am willing to risk $200. Using my rule it would mean that I want at least $4,000 in that account to open that trade. I know that might sound like a lot, but trust me on this it's more than possible to have four or five bad trades in a row. Then what? Well then you dig out those want ads again.
Which brings us to most asked question number two, losses. Yes everybody has losses, I do, you will even the most experienced trader on the planet will have losses. The sooner you accept that and move on the better off you will be. You can't beat yourself up over having a couple of losses. Try not to look at them as losses, look at them as business expenses. They are just a part of doing business, nothing more nothing less. You could see a market that looks setup perfectly to make a move all the planets have aligned and sure enough you jump in and get your fill. Only to have the market turn the other way and take off like a Jack Rabbit, it happens far more often to us than most traders would like to admit. You can't take losses personally you can't try to trade your way out of them and you can't control when they are going to happen. So just don't beat yourself up, take your loss chalk up to a learning experience and move on. Sometimes there isn't even anything to learn. You made the right move everything looked good, the market just turned. It will do that more than you care to think about.
Most asked question number 3, what's the best system for trading? Well the best system for you is your system. Let that one sink in for a bit. There are as many systems out there as there are traders. They aren't all perfect and what works for you might not work for me or anything else. The one thing I can tell you, there is no holy grail of systems. They all can be used by just about anyone; they just all need the personal touch of the user. A system working for a week or two or eight does not making it a winning system. All systems have their good and bad points; none of them seem to work in all markets. There is so much to choose from between systems and how to use them I think I'm going to make that a topic for an entire newsletter all by itself. The bottom line about systems is to do what works for you, learn what you like. Do you like swing trading, scalping, intra day...whatever you like there will be a system you can buy to get you started down the right path while you figure out all the nuts and bolts.
About the Author:
Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Foreign Nationals Mortgage And International Mortgage Borrowers You have full permission to reprint this article provided this box is kept unchanged.
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