Eating like a bird, sh@#ing like an elephant syndrome.

Trading is simple, take in more than you give out. There, my work here is done.

Ok I guess not.

When trading is going bad it is because I am taking in less than I am giving out.  The title of this post is a more dramatic way to say that.  Something that my mentor has repeated to me several times.

There are a couple reasons this happens. It happens when volatility shrinks. When volatility shrinks entry and exit risks are greater. Your expectations need to shift right now or not trade at all.

It also happens when you aren’t getting aggressive at the right time and your total risk gets too high. Total risk is  how much you risk, not how much has been realized.  For example if you have traded 30 contracts and risk $75 on each your total risk is $2,225.  Eventually risk will catch up with you, especially if you haven’t taken advantage of it.

Keeping my eye on volatility and watching my total risk allows me to get over the syndrome.

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