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 I was just looking over a students statistics and he is about breakeven over the last few months but in looking at his down days, they are just too big. My advice to him is “LOSE LESS MONEY”.

Sounds simple but this is very much the hard part in this business. Most traders down days are too big and this must be avoided at all cost. I am guilty of this as my only down day this week was over $5,000 and my average winning day was about $3,600. Still a profitable week but the power of stopping out for the day and being done at a certain number is such a help at the end of the week/month/year.

Instead of picking an arbitrary number that you use for a stop loss try this: take the average of your last 10 positive trading days, net of fees of course. Hopefully you don’t have to go too far back to get 10 positive days. Once you have the average, take 50% of that number and use that as your daily stop loss. Keep this number as a rolling number, so as you get more profitable your stop loss number goes up. In other words, if you are profitable tomorrow, take off your first day, and use Monday’s number.

Once you have set this number down on paper as your daily stop, YOU MUST STICK TO IT, like a gambler sticks to a longshot. If you violate this number get out of the business, you will not make it. Sorry to be harsh but that is the clear reality.

So lose less money and you will make it in trading.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.