If Any of This Applies to You Stop Trading Now

I normally don’t like to preach to my readers, however, this post is one that I have thought about writing for a while. For whatever reason, I have chosen to write it today. I am confident that there are quite a few traders out there who are doing the wrong things and approaching the markets from the wrong angle. I’m sure this post will be controversial to some and perhaps even hurt some feelings. My purpose in writing this is to save those of you to whom this applies some anguish and hopefully, point you in the right direction.

Everything I am sharing with you I know to be absolute fact, both from my own personal experience and from the experience of others I have witnessed. I have seen a lot in my 8+ years in the markets: My experience ranges from having day-traded $10,000 of equity with $700,000 of buying power at a proprietary trading firm (I don’t recommend this because it is very difficult and stressful but you will learn a lot about risk management) to trading multi-million dollar accounts with zero use of leverage and much longer holding periods.

So here it is, if any of the following items apply to you I strongly suggest that you step back and re-evaluate why you are trading and what you are trying to achieve:

  • Do you regularly find yourself on margin overnight and find yourself rationalizing why you should hold a day trade overnight rather than sell it out as a loss (per your original plan)?
  • Do you use such large position sizing that you often get stopped out by “wicks”(short term noise movements that often correct back to the original level)?
  • If you don’t have at least $50,000 of capital that you don’t need to pay bills then you are not properly capitalized in my opinion. Are you properly capitalized?
  • Do you need to make money? If so, then quit now. The pressure to pull money out of the markets each day/week/month will break you soon enough and place you in the wrong mental frame of mind. You will never reach your trading potential if you NEED the money.
  • If you are a new trader are you willing to lose money and face regular disappointment for at least one year?
  • Do you find yourself obsessing over each and every little market movement and news item?

If any of these bullet points apply to you, take a step back and realize that you are doing something wrong. You are not placing yourself in the best possible position to achieve optimal performance. Feel free to leave comments/questions in the comments section or send me an email by clicking on the contact link at the top of the page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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