All sorts of fight or flight, caveman level emotions will run through your body. One thing that isn’t talked about enough in the trading community is the trauma you experience with big losers. This again is where the trading limits come into play as it stops you before you do too much damage to your account – hence taming the beast. It’s these small diversions from your plan that lead to big losses. This may occur in the form of you widening your stops or adding too much size to a position. It’s more about slowly losing the discipline and letting slight deviations from your trading rules. It’s not like you are screaming at your computer and throwing monitors. Letting your emotions get the best of you is subtle at best and creeps up on you. It may seem counterintuitive as the word limit generally mans restrictive.Īs a trader, you will have times where your emotions get the best of you, and you begin to over trade and make poor decisions. Setting a trading limit has many benefits. This same rule of shutting it down applies for weekly and even monthly periods. When the daily loss limit is reached, disciplined traders shut the computer off. Trading with limits ensures that you “put the curbs” in when you are experiencing a losing streak. The key to preserving profits is setting limits on a daily, weekly and monthly basis. Tracking Your – Daily, Weekly, Monthly, and Yearly Limits.
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