Well managed trades really are key to consistent gains, and also breaking even on loosing positions when conditions change. A good trader can often find setups for profitable entries, but ensuring risk control and mitigating unforeseeable market changes are what makes the difference to becoming a master trader long term.
Focus
A distraction, unexpected phone call or interruption whilst making trade decisions, margin trading on high leverage could make a great trade, really turn out not so great.
Mentally preparing yourself to be away from distraction and to be able to purely use logic and reasoning is a skill in itself. A brief time is all it may take, but if you cannot hear yourself think, with notifications constantly pinging you and IMs / alerts flashing up, unconsciously it could be taking your focus.
Be sure you can give all you attention to your analysis, as this will ensure you don’t miss read conditions and do not end up building a house on the sand.
Distraction is but one obvious risk of margin trading, although not the only one we must be aware too - eventually no matter how physically fit we are, trading fatigue will set in and even though we want to continue trading the session, we need to take a break at some point.
Training For Alpha
Trading fatigue can be avoided by daily cardio and interval training, combined with a physical sport or hobby and magnified by a good nights sleep, regular intimacy and healthy diet.
A balanced diet of grains, fresh fruits, vegetables and herbs is crucial to your brains function, as is constant hydration. Make sure you are well hydrated when trading, coconut water or lime water are great to ensuring you stay hydrated throughout the day.
Sometimes you will need a booster, to keep razor sharp focus. For a morning drink, I prefer a cup of hot ginger, as it can be consumed without side effects in large quantities, every day and not effect sleep. Whilst giving good attention, refreshing the body and keeping the mind clear.
Letting Profit Run
Stopping trading entirely and going flat during a break may not be convenient, especially if volatility is high and a trade is progressing. So of course before leaving things to purely chance - we can ensure our gains, by setting a stop loss, and lock our profits in to let the market decide while we are away.
Maybe it’s a great trade and we wake up to much more gains, also what we cannot wake up to is any more loss, than the stop.
At it’s core, without talking about hedging, this is a crucial way to de-risk a position. It removes risk of drawdown and means margin won’t be allocated to a negative position.
I believe trailing stops be it manual or software managed are crucial to any trading plan, in my oppinion a lot of money gets left on the floor without an effective trailing stop. Trading pure price action, scalping volatile sessions has always proved easily that it has a relatively low risk with a trailing stop, that can be set to prevent a reversal whilst letting profit run.
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