The first thing is to find a high-probability Nadex trading strategy that fits your personality and trading style. You have found a strategy and you have tested it in demo mode until you are completely comfortable with the results. In our last blog post, we discussed how to identify the right Nadex trading strategy for your trading personality. More importantly, we also discussed how to test the strategy and how to measure your results.
How to double your Nadex account balance in less than 2 months without losing sleep:
For the purposes of this discussion, let's assume that you have managed to fund your Nadex account with a $1,000 opening account balance. You can fund it for as little as $100, but $500 or $1,000 gives you a little more of a cushion to work with. Please understand that this is risk capital. This is not money that you need to pay your rent or mortgage, pay your bills or to put food on the table. Risk capital is money you find under your mattress, or sitting in a stale savings account, or perhaps raised from selling unwanted stuff in a garage sale. It is money that you do not need to put your hands on any time soon. You can also survive just fine if you lost it all. With that understanding, take your trading seriously and start growing your Nadex account.
Here's a checklist for growing your account:
- Never put more than 5% of your account balance at risk at any given time. That's why a $1,000 opening balance was suggested. $50 is just 5 percent of a $1,000 opening balance. If you trade a high probability strategy (70-80 percent probability) while risking $50 to make $50, there is a very high probability that your account balance will start growing steadily. If you fund your Nadex trading account with a smaller account balance, like $500 you will be putting a greater percentage of your account at risk, but you want to grow it to a place where you can risk 5 percent or less.
- Set a realistic daily profit goal. Stop trading once you achieve it. Let's say your daily trading goal is also 5% or $50. Then in one successful trade, risking $50 to make $50, you are done trading for the day. It may take 2-3 trades to reach $50 if you exit trades early or trade a contract with a smaller payout. Once you reach your daily profit target, get out of the market. Don't go back into the jungle looking for more profit opportunities. That's over-trading, and it can come back to bite you. Celebrate your victory and practice in demo. You are new at trading with Nadex. Refine your craft in demo if you still feel the need to trade.
- Track your performance. Set up a profit plan. You need a scorecard. There is an average of 22 trading days in every month. Divide your monthly trading results into two, 10-day profit plans. Here's an example, using the 7am EST DAX Strategy for Nadex. This is one 10-day period, yielding a $300 profit. If that carries forward over the next three 10-day trading periods, you have a $1,200 profit - more than double your opening balance in less than 2 months. On each day, just one trade was made, and no more than 5 percent of the original account balance was exposed to risk.
- You're going to lose every once in a while. Don't "revenge trade". In the profit plan above, the first 8 days were profitable, the last 2 days lost. If you have tested a strategy extensively (40 times) in demo, you should not let occasional losses bother you. Just let them happen. Revenge trading is a very easy way to bleed out an account.
- Trading with this mindset will keep you from panicking. If you have a high probability trading strategy, and you risk less than 5 percent of your account, you can breathe easier when you trade. You confidently tally your winners and you don't stress when losses happen. Trading is an emotional business. If you trade more than 10 percent of your account balance on any trade, you will feel your blood pressure raise and you will probably panic if the market turns against you.
Conclusion
Trading consistency depends on having a high-probability trading strategy, combined with disciplined money management and a risk/reward strategy in your favor. You also need to trade with a clear mind. When you reduce your risk exposure to the market, it's easier to make level-headed trading decisions.
Trading consistency depends on having a high-probability trading strategy, combined with disciplined money management and a risk/reward strategy in your favor. You also need to trade with a clear mind. When you reduce your risk exposure to the market, it's easier to make level-headed trading decisions.
The Purpose of this Blog
Disclaimer
The opinions expressed in this blog are solely those of the author, and should not be construed as trading advice. I am not a registered or certified financial planner. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. All individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein.
