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

Maximizing Your Profits with Scoring

SETTING YOUR MAXIMUM INTRADAY TRADING LOSS First things first: set a max intraday trading loss. There will be days when you just do not have it. Why do you think coaches pull their players when they are not playing well? They are more harmful on the field than off. When you are underperforming, you are hurting your team and your trading business. You need a system to yank yourself over to the bench. A stop loss is your answer. TRADING BASED UPON THE TIME OF DAY A good trader makes note of what time of day it is, when he trades most profitably, and adjusts his trading to fit such times. Your numbers at the end of the month will not reflect your true trading potential. Make the most trades with the most size during the trading periods that statistically are most profitable for you. Money saved during your weaker trading periods is money earned. Consistency The fact is that most trades you make will start working for you right away. But the new traders also hold stocks that are trading ag...
Post a Comment
Read more

Design Your ideal Mate

The first step in finding and attracting your ideal mate is defining what you want in that person. If you don’t know what you’re looking for, your ideal mate could walk right by you and you might not even notice him or her! By clarifying precisely what you want and reviewing your list each day, you will literally program your unconscious to help you find your ideal person. EXERCISE: Design Your Ideal Mate The Ideal Mate Describe your ideal mate’s traits, habits, qualities, appearance—everything you can think of that would be important to you.  The Mate from Hell If you have a hard time coming up with your “wish list,” start by defining “the mate from hell.” Write about the person you couldn’t stand to be with. What traits would they have? What qualities could you not stand? Attract Your Ideal Mate EXERCISE: Design Your Ideal Mate (continued) What Kind of Person Would You Have to Be to Attract Such a Mate? You need to become the kind of person you would like to find. Describe the va...
Post a Comment
Read more

Profiting By Failure

DEFEAT, LIKE A HEADACHE, WARNS US THAT SOMETHING HAS GONE WRONG. IF WE ARE INTELLIGENT WE LOOK FOR THE CAUSE AND PROFIT BY THE EXPERIENCE.  -Napoleon Hill  Defeat often talks to us in a language that we do not understand. If this were not true, we would not make the same mistakes over and over again without profiting by the lessons that they might teach us. If it were not true, we would observe more closely the mistakes that other people make and we would profit by them also. DO NOT LOOK WHERE YOU FELL, BUT WHERE YOU SLIPPED.  -African proverb  Every defeat teaches a needed lesson to those who are ready and willing to be taught.  AN OPTIMIST SEES AN OPPORTUNITY IN EVERY CALAMITY; A PESSIMIST SEES A CALAMITY IN EVERY OPPORTUNITY.  -Winston Churchill We human beings often give ourselves credit to which we are not entitled. I fear we too often assume credit for wisdom and for results that accrue from causes over which we have absolut...
Post a Comment
Read more