Monday, September 27, 2010

My Main Lesson Here

I beginning to think this method was a mistake to try without some heavy-duty paper-trading. It seem every stock, except NFLX, has flattened out every time I enter a trade on it.
The main lesson here, though, is, DON'T TRY A TRADING SYSTEM WITH REAL MONEY UNLESS YOU HAVE HARD, STEADY RULES TO FOLLOW. This means for every circumstance. This also means you MUST paper trade in order to arrive at those rules...otherwise, you won't know what all the circumstances could be. Yes, you will always come across new ones, but at least the ones that happen often but you don't think about will get out in the open.
There has to also be rules for money management. In other words, you need to figure out how much and how often you can trade for the amount of money you have available. For instance, I had no business trading with only a $500 account (acutally, not even quite that.) $1500 is even stretching it, especially if you don't do your homework and paper trade enough. Come to think of it, there probably isn't a big enough account if you don't do that. Even after paper trading, though, you should be able to withstand 20 losses in a row and still have at least half your account left. Sounds ridiculous, huh? I guarantee, that anyone who figured out how to be successful doing this thinks that way.
I'm going to see what I can get out of my remaining trades and, unless there are some extraordinary circumstances, hold off trading for awhile. Probably do some paper trading, just to solid up my rules.

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