Simple Fixes For Trading Too Much
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The document discusses the importance of knowing when to stop trading to retain profits, introducing the concept of 'the power of quitting' (poq) as a strategy for setting dynamic trading goals. It highlights the challenges traders face in determining the appropriate time to stop during difficult trading sessions and suggests conducting backtests for personalized solutions. Additionally, it promotes ideas like diversification and 'mini sessions' to optimize trading times and improve overall profitability.
Simple Fixes For Trading Too Much
- 2. We would all be better traders if we only knew when to stop trading each session. Before I discovered NetPicks,I wound up giving back a lot of my trade profits. It felt worse giving back hard won profits than it did just losing outright.
- 3. The real problem was that I had no intelligent or effective way to actually know when to stop trading. If I quit too soon, I would miss a bunch of good winners. If I traded too much, I gave away my profits.
- 4. When I first started with NetPicks as a customer, one of their most important concepts, ‘The Power of Quitting,’ didn’t really make sense to me. If the strategy was so good, then why would I want to quit trading?
- 5. It is such a counter intuitive concept and later, as I learned more and actually began to turn my trading around, much of the new found success was largely a result of actually empowering myself to stop trading.
- 6. In short, the Power of Quitting (POQ) is a dynamic goal setting strategy that allows you to take what the market wants to give you, while allowing you to quit with positive results on ‘most’ sessions.
- 7. In its most basic form, you need to get a winning trade AND have a positive result. This can be accomplished with the very first trade sometimes. Other times it requires more trading.
- 8. There are also different formulas that you could use. POQ 2 means that you need to have TWO winners and a positive result. The PTU Trend Jumper actually needs a full target winner for one of its winning trades to qualify for POQ.
- 9. One issue that gives many traders problems is knowing when to stop on a hard session. There will be sessions with ALL strategies that just will not get positive. How long should a trader continue trying to get positive? What’s a good circuit breaker?
- 10. This is one of the most difficult questions to answer. So much of it depends on the trader…. How long can he or she trade? How much capital do they have? How much stamina and attention span do they have? How much skill? Etc..
- 11. The only way to really know that answer is to actually conduct your own backtests so that you can come to the best answers based on actual research and understanding. Each strategy is different. Each market is different.
- 12. Some traders love finishing a session, one and done; that is, winning on the first trade to satisfy the basic POQ 1.
- 13. Some traders want to trade more but they also see the benefit of a POQ concept. Diversification is certainly a smart thing to work into your trading too.
- 14. How does one satisfy all three wants while still remaining consistently profitable? Here are two ideas that have a lot of merit.
- 15. Diversification is one answer. You could begin trading 1 market and as the session progresses, stagger in other markets. Crude Oil or a Forex pair could start at a certain time in the pre-market. Then when the US market opens, you could trade an e-Mini or a grain futures, for example.
- 16. Another idea that I really like, is the whole idea of the ‘mini session.’ In the PTU for example, we learn how to use tools that help us isolate the most productive times of day to trade a specific market. Some markets have various pockets of time that are more productive than others.
- 17. Taking that idea to the next level, I like treating each ‘pocket of time’ as a unique session, each with its own start time, stop time and POQ goals, typically, POQ 1, with a full winner being necessary to qualify. That means I have to have a full winner and be positive before I could quit the mini session.
- 18. I also combine it with a maximum number of trades, a maximum number of losses and a hard stopping time, which would end the mini session.
- 19. Then I just wait for the 2nd mini session to begin. The second mini session has its own unique trade plan and POQ, just as I described with the first.
- 20. The important thing is to not overtrade. Combining a smart and dynamic goal setting strategy to your overall trade plan is essential to success.
- 21. Anyone can make a winning trade. The hard part is hanging on to your hard earned gains on a steady basis and consistently growing your account. That’s why we trade.
- 22. Remember, it’s not the quantity of trades that we take. It’s the quality! It’s also being able to keep our profits. Controlling one’s risk exposure to the market is critical to success and the Power of Quitting is the perfect solution.
- 23. But if it’s not enough for you, don’t throw the baby out with the bath water. Consider the idea of the mini session and learn to focus in on the most productive times of day to trade while still controlling your exposure and keeping your profits.