Thursday, October 26, 2006

Rules

There are rules and there are Rules.

You know what I mean. Adding to trades at a loss, moving your stop against you because you still believe in the trade, we all have done it. (If not I truely admire your discipline)

But as a daytrader there is one rule you should never ever violate:

If you leave your screen you are flat with no open orders

Yes you miss opportunities and it will mean a trade you close at a loss would have shown you a profit. But it also means that there is nothing to worry about. You will have a sound and refreshing sleep and a clean slate the next morning.

I now apply it also intraday. If I have to go for 1 or more hours I’m flat. You just don’t know, what will happen and if you have no chance to interact with the market, you better stay flat. There are so many opportunities when you are at the screen, why take the risk to have a trade go against you, when you can’t intervene. Sure you have bracket orders, but these can fail, the exchange can go down, your computer can crash…

Just don’t do it, your first and foremost interest is in protecting your account. You take enough risks, when you are at the screen. No need to add to that by letting your computer trade automatically when you have no ATS

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