Skip to main content

ENFORCING TRADING RULES

 Sometimes the most important thing a prop firm leader can do for a developing trader is to say, “No.”

No, you cannot leave early. 

No, I will not raise your loss limit since you are stopped out and your mother feels bad for you. 

No, you cannot trade with more size yet. 

No, you cannot blow off the AM meeting. 

Many traders trade independently with their own money from their house. They have their own rules but when they break them there are no consequences. For example, an independent trader will create the rule that if he exceeds his intraday loss limit, then he will shut down his trading for the day. Let’s say that that intraday loss limit is $1,500. The independent trader will be down $2k, recognize that he has exceeded his intraday loss limit, and continue trading. The independent trader will offer excuses to himself. That rule was not meant for a day like today. I just got screwed today, the rule does not apply. And then this trader will proceed to rip up another $1k. Does this sound familiar?

It is the job of a proprietary desk to ensure that you are following your own (and the collective) rules. If, for example, you must be prepared before the Open, but come in late, then you cannot trade the Open. We do not make exceptions. You must be prepared to trade on the Open, and if you arrive late, then you are not prepared. If you are not prepared, then it is not in your self-interest (or mine) to trade the Open. Instead, you trade on the demo until 11 AM. Traders will often ask for an exception to be made. My answer is, “No.”

When a trader is stopped out, they must sit and watch stocks trade all day and learn. He is not permitted to go home. 

Every successful prop trader knows his best setups. There are some traders who just know a great setup when they see it. But when you begin, it is important to measure your trading.

For example, do you trade momentum setups better than buying into a pullback? If so, then you should spend more time trading momentum plays.

The importance is not necessarily to learn this trade but it is to understand what works best for you.

If you want to be great at anything, you must practice.

Comments

Post a Comment

Popular posts from this blog

Learning from adversity

 If they knew that every form of defeat, and all failures, bring them the seed of unborn opportunity, they would keep on fighting and win. Success usually is but one short step beyond the point where on quits fighting. Failure is a man made circumstance. It is never real until it has been accepted by man as permanent. Failure is a state of mind; Therefore, it is something an individual can control until he neglects to exercise this privilege. Failure brings a climax in which one has the privilege of clearing his mind of fear and making a new start in another direction. Failure proves conclusively that something is wrong with one's aims or the plans by which the object of these aims is sought. Failure is the dead end of the habit-path one has been following, and when it is reached it forces one to leave that path and take up another, Thereby creating a new rhythm. It gives an individual an opportunity to test himself wherein he may learn how much will power he possesses. Failure als...
Post a Comment
Read more
 All great leaders in every walk of life are highly sexed, but they follow the habit of controlling their sex desires, switching them into a driving force behind their occupation. The person who has self discipline understands the emotion of sex, respects it, and learns to control and transmute it into contructive activities. Q: Just what damage is there in over-indulgence of sex? A: The greatest damage is that it depletes the source of man's greatest driving force, and wastes, without adequate compensation, man's creative energy. Controlled sex supplies the magnetic force that attracts people to one another. It is the most important factor of a pleasing personality. It gives quality to the tone of voice and enables one to convey through the voice any feeling desired. It serves, as nothing else can serve, to give motive power to one's desires. It keeps the nervous system changed with the energy needed to carry on the work of maintaining the body. It sharpens the imagination...
Post a Comment
Read more

THE SUCCESS HABIT

“Success is simple. Do what’ s right, the right way, at the right time.”  —Arnold H. Glasow The choice we face is whether or not we want to form habits that get us what we want from life. If we do, then the Focusing Question is the most powerful success habit we can have. Whenever the outcome absolutely matters, I ask it. I ask it when I wake up and start my day. I ask it when I get to work, and again when I get home. What’s the ONE Thing I can do such that by doing it everything else will be easier or unnecessary? And when I know the answer, I continue to ask it until I can see the connections and all my dominoes are lined up. Obviously, you can drive yourself nuts analyzing every little aspect of everything you might do. I don’t do that, and you shouldn’t either. Start with the big stuff and see where it takes you. Over time, you’ll develop your own sense of when to use the big picture question and when to use the small-focus question. The Focusing Question is the found...
Post a Comment
Read more