Three stages of trading objectives.

I am looking back on how my objective as a trader has evolved.  It is funny how much theory and application changes how you view things.  Letting the market/situation change how you view it is important.  Everybody comes in with some expectations and it is constant race to keep the spread tight between expectation and reality.

To make money every trade. At first, I did not have the ability to make money every trade.  After I had the ability to make money on most trades I realized it was a horrible objective.  If you want to make money on every trade you are always waiting.  You can never take that much risk and hence the rewards are very small.  I was trading 1’s and 2’s to start, which was the right thing to do.  I would watch my mentor take every trade, no matter how dog shit it was.  As a 1 and 2 lot trader you do not have the same luxury to take dog shit trades because you can only trade one way.  Because of the flexibility he had he could do more and the truth is no matter how good or bad a trade looks we don’t know until we are in it. Getting the most out of a trade is the mark of good trader.  Risk is always related to reward.  There is very little money in making money on every trade.  This type of trading is like making 100k and keeping 80K

To make huge chunks of money.  After I realized that objective did not work for me I shifted to the extreme.  I started to swing for the fences whenever I had the ability.  It is nice when I was right but I struck out a lot too. At this point, I did not respect trading.  I did it because money made me a bad ass.  Well as you know you hard to pay your bills with bad ass.  This type of trading is like making 200k and keeping 80k.

Here are the major risks of having both of those objectives.  The first is making small amounts of money no matter the situation.  Eventually you will get in a hole because statistically you are behind.  Trading every situation the same is bad.  The second objective is trying to make huge amounts of money on every trade.  If the first trades were the best and I stopped it was great.  If the first trades were bad, I was forced to stop.  It made it hard to learn.

There are definitely times that both of those objectives are the right thing to do. The third objective, what I found works for me, is what we will talk about that tomorrow…

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  • Jason Leavitt

    I agree. Trying to make every trade profitable will cause one to take a quick 1 point profit when the position should have been held for much more. If a baseball player tried to never strike out, his only option would be to bunk every at bat. He may accomplish his mission of not striking out, but he’s not he’s not helping his team and he’s not getting any better as a hitter.

One Response to Three stages of trading objectives.

  1. Jason Leavitt says:

    I agree. Trying to make every trade profitable will cause one to take a quick 1 point profit when the position should have been held for much more. If a baseball player tried to never strike out, his only option would be to bunk every at bat. He may accomplish his mission of not striking out, but he’s not he’s not helping his team and he’s not getting any better as a hitter.

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