Old Soldier's Comment
"I follow a pretty strict Risk Management and Trading Process:
1. Never risking more than 1-2 percent of my Portfolio on any one trade - EVER!. I do this through my technical analysis and risk planning prior to the entry. No entry until the exits are planned. I use only mechanical stops, limits, etc. No emotions this way. Once set - they are set! I have learned through costly experience that when I have adjusted the stops or limits I have had either smaller profits or greater losses. No matter what! I use and trust the mechanical "servants" over my human "emotional" mind. Some use what they call "mental stops", I disagree with this method - life happens. Network connections go down, distractions appear out of no where, markets crash unexpectedly, etc...
2. Keep entry points at viable areas to maximize gains, always selling half my shares/contracts (always play even number of contracts: 2,4,6...)upon reaching my initial target point. If I "leg" into a trade then I will treat these additional contracts as new plays and treat the them the same way.
3. Always placing a pertinent trailing stop on remainder of shares/contracts based on the ATR and prior support/resistance levels.
4. Never complaining about taking profits even if the stock continues to move after my exit (why complain if I achieved my goal and met the conditions of my plan?). It is not profits until you sell - on "paper" doesn't count.
5. Maintain viable watchlists and playlists.
6. Follow a strict daily routine for all areas of my trading. This is a business NOT a hobby.
7. Keep my focus!!! I try to balance my trading with all the other areas of my life. To do this, I try to make every move count. Worry is not an option - no pun intended. To worry is to be distracted. ALways remember this is a business it is not a game.
8. Always help someone along the way! I got here because of some other really good people who gave of their time and experience to me. Always be willing to learn - when we stop learning we stop living!"
Thanks Old Soldier! I've always feel that blogging is about sharing and learning. So don't be shy to drop me a comment anytime, I welcome them.
posted by Simply Options Trader at 11:13 AM PERMALINK
5 Comments:
Old Soldier,
You are welcome!
You are right. Trading without a plan is like driving not knowing your destination - simply heading for disaster. And this is speaking from my own experience.
Would be most happy to hear abt your recent trade, regardless of it winning or losing. Thanks!
Old Soldier,
Thanks for providing the chart. Let me start the ball rolling with some questions on this trade for the benefit of the readers:
-Did you buy current month option or further out?
-How did you determine entry for this trade? What technical analysis do you use?
-How did you determine your initial stop loss and profit target? I remember you mention using ATR. How do you apply?
I'm currently using IB as my broker. Which broker are you using?
Thanks!
Thanks Old Soldier. I think that as long as you've trade according to plan, the trade itself is already a success, even if this means leaving some money on the table. I mean there is no way we can always catch the bottom and the top exactly.
Although I know what ATR is, but I've not used it as part of my trading before. If say ATR is about $1 (as in the case of COH), is your stop loss set at say entry price less ATR or as some function of ATR (e.g. 1.5X ATR etc)?
The WHY-Trader
Old Solider,
Thx. One more question. How do you come out with your watchlist? You use any scanner?
The WHY-Trader
Post a Comment
<< Home