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Staying with Winners

When you are riding a winner, avoid looking at it all the time.Search out new trades in other markets.Absorb yourself with looking for opportunities elsewhere, if you are the type that must have market action.Diversification is the key word here.But remember, you can afford to take only the very, very best trades elsewhere when you are riding a winner.Don't blow away the profits you are making on your winner by maniacal trading in other markets.

The best and perhaps the only way to make money in the markets is to cherish and succor your winning positions.Stand back and admire them, appreciate them.Let them develop, unfold, and make you money.

Please don't confuse staying with winning trades with long term trading.They are not the same.In my own case, most of my long held winners start with a short term daytrade held overnight because I am trading towards the breakout of a major entry signal, such as a Ross hook, or a 1-2-3 high or low.

For most traders, because they don't have the deep pockets, the patience, or both, to be long term traders, shorter term trading is best.It is in shorter term that the trader with the smaller account can profit.

Here's a good way to handle your money management:Divide your risk capital into 8 percent segments of declining equity balance. (For example, $10,000 account, risk maximum $800 total on your first trade. If you lose $500, then risk a maximum of 8% of $9,500 on the next trade.)

Such a strategy will allow you to successfully take more than a dozen hits in a row.The odds of such NOT happening are greatly in your favor.With mediocre trade selection or worse, such as the flip of a coin, you should get at least one winner.If you ride that winner, you should come out ahead.

Practice not trading as often as you have been.The brokers are rich enough, you don't need to trade to make them happy.When you have a winner, reset your stops often, keep them moving.

There's a saying in poker that you should think about from time to time.It goes something like this: "If you've been in the game for twenty minutes, and haven't yet figured out who the patsy is, then it's YOU!"Think about that when you run your business of trading.Take your time, be patient, let the markets show you what to do.Let the markets come to you, fill your positions, and then take you for the supreme joyride of making a year's pay on a single trade.The ride is worth the wait. 



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Saturday, 22 June 2024

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.