Bad Start to Trading

M Jagadish
If you are a day trader and have a bad start (assuming you are not an opening gap specialist,) what do you do when you have a bad start? Suppose you keep $2000 as your worst case loss for the day and for some reason you violated something and ended up -$1800 in quick time, what should you do?

--> Take a break, have some coffee.
--> Breathe deep and analyze the real reason why this happened. Do not justify anything.
--> Promise yourself you will not violate anything for the day and hopefully from this point on.
--> Make sure you keep in mind that you have just $ 200 to go. Do NOT take another $2000 risk.
--> The most important thing. Cut down the trading size drastically. If you were trading 500 shares, try 100 for the rest of the day.

Trading and Capital preservation

Capital Preservation

Very simple. If you don’t have money, you cannot trade. This means protecting your money is your prime concern when you trade frequently. Profits will come eventually. The best way to minimize risk is not to trade when conditions are not to your liking. Also, trading in a sideways market is not healthy for a professional trader. Volatility is alright as long as you know how to manage risk. Use leverage only if you can trade responsibly, not recklessly. Leverage is a curse for those who do not trade responsibly.It is famously said that you should trade money that you can lose. For most of us, that amount is very difficult to define. You should spend a lot of time to think what it is for you. There are established money management calculations to help in doing this. Before starting to trade, you should indulge in judicious planning. When you have started active trading, never forget to keep the concepts of Money Management in you mind all the time.

Trading is Boring

The popular myth that draws most people to the stock markets is because they think that trading is easy and exciting. This is as far as it can get from the thruth. Trading is boring to professionals when executed well. There is Buying and Selling. But the most time should be spent in Waiting. Waiting for the right opportunity to surface, waiting while holding good positions. If you seek thrill, try the roller-coaster ride, your kids too can enjoy !