March 17, 2021 4:42 AM PDT
If you‘re not busy I’m just wondering which places and things I must
avoid at all costs to not blow up. Some are obvious I think like don‘t
use options to make total account bets and stuff like that. But I’m just
wondering what you think are the less obvious ones.To get more news
about
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1. You would rather be right than trade right. For short-term traders
adding to a position with price trading against you is arrogant. Losers
add to losers. No one cares what you think about XYZ stock. Get over it.
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2. A trader without edge is a trader about to go over the edge.
Strategies work and then they dont. Too many follow “gurus” who are not
teaching a strategy with edge. Learning a strategy with edge still
requires you to internalize that edge for your trading.
3. Trading a time frame great for your neighbor and expensive for you.
If you think slowly and comprehensively, as described in Thinking Fast
and Slow by Professor Kahneman, being an active scalper will not work
for you. If you are a fast-thinker, trading a macro strategy is just as
foolish.
4. Commissions, commissions, commissions. I have heard countless
stories of traders with commission structures that give them little
chance to succeed. You might call this a trading death by a thousand
cuts. As way of comparison, our professional firm traders are charged
less than $1 per thousand for their trades.
5. You have no trading skill. Unlike what the Financial Media
Entertainment propagates endlessly, trading is a game of skill and not
“talking your book.” Take a course. Read some books. Trade on a demo.
Study trading. Develop an edge. Then dip your toes into the shallow end
of the trading markets, incrementally risking more only after success in
real-time.
6. You bet too big. Bet 1k on a trade after you have proven in
real-time you can successfully bet $750. Leaping from 1k of risk to 10k
of risk per trade will lead to risk of a trading account blowup.
Incrementally increase your risk.
7. You have no process to improve as a trader. You either get better everyday as a trader or you are eliminated.
8. Your trading plan is about to be planned. In One Good Trade, I
outlined a trade plan before each trade. Markets move fast. Without a
detailed trading plan before each trade the market will have an
unwelcomed plan for you.