Looking back on the good, the bad and the ugly trades of 2014, it is important to learn from past mistakes and develop solid ground rules for successful trading in the future.
Here are my New Year's resolutions for trading with Nadex in 2015:
- Never risk more than 5 percent of your trading account balance at any given time. As your trading account grows, risk 2 percent or less.
- Pick a reasonable daily profit target you know you can reach within 1-2 trades. Quit trading once the target is reached.
- Keep a detailed log of all live trades. Did you make your daily or weekly profit targets? What strategies did you trade? What was your state of mind that day?
- Keep a detailed log of every strategy you are testing in your demo account. Is this a good strategy or not? What does my profit plan look like using this strategy over 40 demo trades? Is it a keeper, or should I chuck it?
- Only trade strategies with a high probability of success. Make sure your maximum risk is always less than your probability of success. If a trade has a proven track record of being successful better than 70 percent, and you risk less than $70 on every trade, your account balance will likely grow.
- Never trade into the news, unless you have a high-probability strategy for trading into news. Let the marketplace digest the news and act accordingly.
- Place limit/pending orders instead of market orders whenever possible. You will have less money at risk and you will get filled most of the time. Those savings add up over the year.
- Invest in education and subscribe to services that give you an edge. When you're done trading for the day, spend some time learning about the markets. Sit in on webinars. Read books, articles and papers on Nadex trading strategies and the markets you like to trade. If someone offers a paid subscription service that gives you an added edge and makes you money, then it's worth every penny spent.
- Become a "master" of your favorite trading strategy. Be so good at it that you can do it in your sleep, write a paper about it or do a webinar.
- If you feel weird about a trade, don't take it. Trust your gut. There's probably a good reason for not making that trade.
- Trade only when you see a setup that agrees with your trading rules. Don't look for "action" just because you want to trade.
- Don't over-trade. Don't revenge-trade. Don't "chase" trades. For obvious reasons.
- Some days it's okay not to trade at all. If it's a weird day in the markets, and all of your favorite strategies aren't behaving the way they normally do, then why risk it?
- Be patient. This is an ultra-marathon and not a sprint.
- Build your account patiently and leverage the power of compounding. If the rules above are strictly followed, then it's possible to take a $500 opening account balance and grow it over time.
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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.
