Learn and Invest in Yourself, Part 2

Updated: Feb 11, 2020



Contraction Leads to Expansion


When you have small range on your trading instrument - nothing to press there. No pressing for large target, and no increase in size. Plenty of waiting. Someone will increase size in wrong time. Someone will be stubborn to hold, only to see price swiftly comes back to entry, without taking any profit. Hard times if you MUST make money. Especially if you missed bigger moves, and want to "catch up" in low vol markets. Wrong. You can't press in a small range. Low volatility – contraction, leads to higher volatility – expansion. Then you can press, but only when all is aligned in your favor. First thing to do is just having a larger target in higher volatility and learning to hold for more. You can do that when larger time frame bias is in line with short term bias. After you learned that, then you can try to increase size, but only when you have a good streak behind you, to risk more out of the money you already made. So, risking the part of the profit, not your core account. Never increase size in small range markets. And never increase size until you become at least positive on monthly basis.


Positive vs. Profitable


Being positive is not the same as profitable. Being positive is that your head is above the water, nothing else. Basically you are struggling. And majority of traders struggle all the time. I have been there longer than I expected. Some are there all the time. Traders will go from one strategy to another. They will have a few good weeks, than lose all of that in a few trades, or even worse – in a single trade. Being profitable means that you can withdraw some money from your trading account each and every month. Like a salary. To really live out of trading. That doesn’t mean private jets and fake laptop trading from the beach, spending daddy’s money, but being able to pay the bills out of trading. And grow step by step. That is very difficult to do with small account, since in this way its growth is interrupted every month by withdrawing funds. You need money to make money, as they say, so it is easier when you have a large account. Again – not something that majority of traders have. And path from the trading idea to profit is not always a smooth ride, like you will see in the next article - Part 3. Even if your idea is actually good.


Learn and invest in yourself.