Part of the Puzzle for Trading SuccessPosted by brunson stafford on February 2nd, 2017 BY PRICELINE TRADING SYSTEM – www.PricelineTrading.com In some ways, day trading can be a great job: no bosses, potentially large income, take a vacation whenever you wish—you can even work in your pajamas if you want. However, no one wants a job where he or she loses money going to work. Most day traders do lose, but the high profit potential and flexible lifestyle associated with day trading keeps many people motivated to continue trying. New traders as well as more experienced traders often wonder and search for the perfect indicator, the “amazing method.” Unfortunately, there are no perfect indicators or methods. But there is a great deal of trial and error, evolving market conditions and many obstacles against you. A successful path for one trader may not be right for another, and different traders can have very different ways of implementing the same risk, knowing that one single trading day is just a small piece of a much bigger puzzle. I have been assisting clients with day trading online for nine years. I have never witnessed a situation where one single day “made a trader,” but I have witnessed many single trading days that destroyed traders. In the example, trader A, who started the day with ,000, should have a daily loss limit (depending on the level of aggressiveness) somewhere between 0 to ,000. (I will provide a specific way to calculate your daily loss limit later.) The next step, now that you have decided on what your daily stop limit should be is to identify which level of profit will trigger breakeven money management. By that, I refer to a level of daily profit that triggers the thought: “I am up X amount today. If, for whatever reason, the rest of my trading today does not go well and my daily profit/loss is back to zero, I should call it a day.” It is my opinion that once a trade reaches a critical level of profit, it should not turn into a losing trade. Aside from the financial implications, the psychological impact of watching a nice profit turn into a loss can spell disaster, as it opens the door to negative psychology that can spin out of control. The same applies to your trading day as a whole. Knowing that you have the mental toughness to walk away from trading if a profitable day reaches the breakeven point will reward you greatly the next trading session. Going back to the example: Once trader A’s ,000 starting balance for the day generated a profit of 0, he should not see his profit/loss for the day turn negative. Moving on, you should also decide on a certain profit target that is higher than your breakeven point. That level of profit, when and if achieved during the day, should trigger a corresponding trailing stop. Assume that trader A is now up ,000 during the trading day and after implementing the new daily risk management strategy, has decided that if he is ever up a ,000 during the trading day, his trailing stop is 0. That means trader A will continue to trade as long as he does not give up more than 0 from the intraday high mark of profits. If trader A continues to do well and is up ,400 for the day, he should not finish the day with less than 0 in profits. If his profit/loss comes back down to 0, trader A should flatten positions and call it a day. By implementing this technique, he allows himself to continue trading as long as he does not give up too much of the profit for that day. Hopefully, these words of wisdom from a thirty year trading veteran will help you become a success at trading. Master the art of successful trading with PricelineTrading.com. We have over a combined 50 years of experience in the trading industry. This experience ranges from working at the CBOT with Alpha Futures in the Treasury Bond Pit, Arbitrager at the CME S&P 500 trading pit and Futures Broker for exclusive clients at Lind-Waldock and Company. By having this type of experience we can help any trader succeed if they are willing to learn. Please visit PricelineTrading.com’s other websites, blogs and social media: WEBSITES BLOGS Like it? Share it! More by this author |