Never blow out again (or put another way never get in a situation where blowing out is even a remote possibility). Having this as my Number 1 rule that absolutely must not and cannot be broken has kept me from blowing out for over a decade (blew out a few times the previous decade).
Well, it's more of an inventory checklist to make sure I don't repeat all the same chronic newbie mistakes (as often, anyways...) I had to come up with this list to finally ascertain which mistakes I made over and over again, because for me it could all get lost in a blur... As I screwed up during the day, I would mark "no" on the area that I messed up in - at the end of the day, I would fill in all of the "yes" answers - then I found an amazing trend - on the days that I lost money, several of those rules were broken. On the days I made money, few or none were. Point is, following these principles turned me from a chronic losing trader into more or less profitable (that and some awesome coaching from a more experenced trader/mentor). Good Luck, Paul PS I should state that some of these have evolved as I have become more experienced (I.E. I will make a counter-trend trade for a scalp or reversal trade but not for intraday range-trading)
here is the outline I used to write the trading plan that the Trading inventory was used with... Paul
Here is the 3rd part - a Trade Log sheet (this is for ES or NQ trades but some quick mods will work for stocks or ETF's... Use the Trade Plan Outline to write a trading plan, use the Inventory to make sure you are following it and the Trade Log to track trades... Hope it helps someone... Paul PS NONE OF THESE IDEAS ARE MY OWN ORIGINAL THOUGHTS -THEY WERE ALL SHARED WITH ME ON ET - THANKS TO ALL WHO HAVE HELPED ME MAKE IT.
Paul, I have a similar document for my trade logs. It's not as detailed as yours though but still I can go back and review my performance (not necessarily P/L). It's essential to keep these logs for tracking down repetitive mistakes. How many trades do you do in a typical day? Thanks, Chinook
Now I get it. From now on I'm going to make every effort to cut my profts short and let my losses run. I'll add to losing positions, and scale back on winning ones. Waiting for my setup to occur won't be happening anymore. And when it comes to discipline, I'll try to have none. Yeehawww - now I'm a traderman!
LOL! I think he was talking about "Trading Rules", though - not commonsense. What you are talking about is simple money management = common undeniable truth. Regarding the general trading rules, there are many many that are wrong, that's clear to me now. As you get better and better, you eventually get to a point where you realize that a whole lot of common rules do nothing but make you a loser or at least inhibit you from becoming a top-performer. What is my personal advice then? OK, it doesn't count much but this is what I'd do (and do now) as a day trader: - Find 1-3 instruments, the best is just one. Correlated if possible. I use ES and NQ. - Get to know everything you can about those couple of issues, how they move, how they stop out, how they fake, how they correlate, what the tape sizes (orders) are, what effect the different tape sizes have on the market, i.e. 100 or 250 cars means a certain thing on ES, a slightly different thing on NQ. Get to know all the nuances. - Specialize on the charts as well. Know what happens how many seconds before a 1, 3, 5, 15-min bar closes (such as caused by systematic traders). Really know your chart pattterns on that issue well. - Don't use indicators. I had used TA all my life and recently was "pushed" by a fellow trader to give it up totally. It was a painful process for me, but now I have no regrets and I'm free. Now all I have is naked price, volume and occassional S&R tools, i.e. support lines or sth, that's it. Indicators do nothing but clog up charts and bias your decision, on top of that lagging. The past is completely irrelevant. Avoid them like the pest. In the very end of it all, even charts don't matter. Then all that matters is T&S / the tape. Well, that's just me, anyway. Have Fun! Scientist.