What do you do to stop overtrading / manage trades? | Psychology and Money Management

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What do you do to stop overtrading / manage trades?

  #22 (permalink)

Trading Experience: Advanced
Platform: Multicharts, Jigsaw
Broker/Data: Stage5, OEC
Favorite Futures: Treasuries
arnie's Avatar
Posts: 816 since May 2010
Thanks: 718 given, 1,007 received

Yeah, I guess the most important things is to set basic rules.

Set the time you trade.
Say... I'll trade between 8am to 9am. That's it! Don't care if all trades done so far was all winners, don't care if haven't done a single trade yet... only trade for 1 hour, that's it!

Set the number of losing trades in a row.
Say... if I lose 3 trades in a row, I'm done for the day. Don't care if only 5 minutes have passed since you started traded. 3 losers... you're out!

Set a stop and target automatically.
Say... I want to 6 tick stop and a 10 ticks target (it depends of the instrument you're trading) or something in line with your type of trading. Open your position, the strategy applies automatically and that's it! Don't move a muscle. Let it play.
If your stop gets hit, you read the market wrong. You need to improve the reading. If the target gets hit, you read the market correctly. Keep doing it.
Learn from each trade. Keep a record of the trades. With time you're going to recognize patterns.

Starting build your rules from the ground up.

And something I almost forgot to mention, trade an instrument that allows you time to learn this.
The new micros are a great tool for that, although the slippage can be a pain depending of the type of trading you do

If I become half a percent smarter each year, I'll be a genius by the time I die

Last edited by arnie; June 27th, 2019 at 03:17 PM. Reason: Forgot something
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