Following The Rules...
Well...If rules were easy to follow they'd never be made in the first place right. I gave it a go today with my new rules. I made some good observations. One of which. Stop losses should be placed at an optimum level that takes into account three very important factors.
1) Money lost if stop loss is hit
2) The volatility of the instrument
3) Important technical areas
Figuring out the right combination of these to optimize your stop loss distance is difficult. Probably the most difficult thing is that 2 and 3 change every minute. I think though one helpful thing is too remember the 2.5 times rule and ask yourself...if I place this stop loss here, is there (in your opinion) a good chance the market will hit your stop before it goes 2.5 times the OTHER way and makes you money. If you say yes, wait.
Basically what I realized today is that trading is about aggression, but not as much as something way more important...patience. If you are patient and can wait till you feel the odds are in your favor then you become aggressive, you will be a better trader.
Goals for tommorow: Don't trade until you feel the odds are in your favor. It's hard not to trade if you are bored. It's like being stuck at a blackjack table and not putting any money down, and the dealer keeps looking at you funny. You are in control...you decide when to play...look that dealer square in the eye and say, "get me the drink girl, because I'm not movin!"
1) Money lost if stop loss is hit
2) The volatility of the instrument
3) Important technical areas
Figuring out the right combination of these to optimize your stop loss distance is difficult. Probably the most difficult thing is that 2 and 3 change every minute. I think though one helpful thing is too remember the 2.5 times rule and ask yourself...if I place this stop loss here, is there (in your opinion) a good chance the market will hit your stop before it goes 2.5 times the OTHER way and makes you money. If you say yes, wait.
Basically what I realized today is that trading is about aggression, but not as much as something way more important...patience. If you are patient and can wait till you feel the odds are in your favor then you become aggressive, you will be a better trader.
Goals for tommorow: Don't trade until you feel the odds are in your favor. It's hard not to trade if you are bored. It's like being stuck at a blackjack table and not putting any money down, and the dealer keeps looking at you funny. You are in control...you decide when to play...look that dealer square in the eye and say, "get me the drink girl, because I'm not movin!"
posted by Shiptastic at 9:27 PM
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