Today is Thursday March 25th and what wild ride on Wall Street today.

It is to bad I did not have or allocate more time to trade today. This is one of those days that my T-2 trade model would have cleaned up, if you had traded it for any length of time. A trending market is great to catch up in any daily trading goals you may have come up short on in past trading days. If a trader could work a trending market a couple of days a month, you can make more than your daily goal by 5 or 10 times.

Yesterday, I suggested that if your trading is flat, to decrease your contract size until more favorable conditions open up, or to just wait it out. The idea is do not increase your size if you are under-performing. If you do, you are being influenced by outside forces, MONEY. That is not a good idea in the long run. The worst thing that can happen is you increase your size when trading poorly and you hit a few good trades to make up for it quickly. I am tempted to do this myself now and then, but it is really not a good idea. You will build precedence for doing this the next time and you may not be so luck then. Doubling up when you are underwater is a form of being impatient. You want what you want and you want it now. Resist the temptation and talk it out, to yourself if you have no one to listen to you, most likely. It is to easy to go only deeper underwater and this is where those dreaded wipe out days come from two or three times a month. You may say to yourself, if I could only remove those really bad days, I would have come out pretty good for the month. Well, there is hope.

First, you need to be strong mentally and not let yourself loose control. Again,resist the temptation and tell yourself  “focus on what is before you at that moment in time” and do not become anxious. Tell yourself, “my moment will come”, just wait and you will see the open door you were looking for. Take each trade one at a time. If it is a choppy market, take it a piece at a time, just use good judgment and take the high probability trades, assuming that you know what those are. (If you don’t, then maybe you should email me get some training & mentoring)  If the market is showing signs of trending, then you should adopt that type of strategy to make the most of it.

This brings me to my main point for today. If you have the time, feeling good and the market is co-operating, that is the day you want to take advantage of the conditions. All three of those need to be present, if you are not feeling great, then it is better to get your daily goal and wrap it up. It is to easy to make mistakes if you are not all mentally there. You may have not gotten enough sleep the night before and or what have ya.

Back to the point, if all three of the above conditions are present, I feel a traders has a green light to clean up. There are several ways to approach that.  A conservative way is to gradually decrease your size as the day goes on, but keep trading. That way, if you have draw downs, as the day comes closer to the close you will ensure that you are going to close well in the green even if you have loses near the close. Try and remember that, it could serve you well. There is nothing wrong with being conservative, you will ensure your survival.

Another way and it is an alternative that can pay big if you have discipline and feel well grounded. As mentioned, with the above conditions met, adding on to positions or “scaling in”, as the market is moving in your favor at key spots. This is a form of “Trade Management”.

I don’t do this that often myself, but I do know how to and could if I want to, for sure. Take a day like today. You need to trade what you see and not what you think to start. Next, in a strong moving market instead of scaling out of your trades, you scale into them, at key spots.

If your first entry is wrong, you have a smaller more manageable loss. If you entry is good, you scale in along the way at key low risk spots. Each add on has its own independent stop and as the trade moves your way, you clean up. This is an advanced strategy and you really need to feel comfortable with the basic all in all out approach first. This is risk management to the upside. The opposite of those big loosing days to the downside. If you get just two days like this per month, you can make up a lot of ground and or you can forge ahead into new equity territory.

If you try and get what you want from the market but do it at the wrong time, you will not only get what you want, but loose what you could have had and then some. Think about it. This is “Risk Management and Trade Management”.

Trade more aggressively when the market tells you to, not when you want to. Again, you will be glad you did.

Trade on and be safe.        P.S. will show two small winning trades I took today in tomorrow post.

Related posts:

1. Trading & Risk Management
2. Risk management and Scalp Trading mindset
3. Access Trade Risk
4. Time Management – Enhances Day Trading Goals

Tags: Risk Management, scale in, scale out, trade management