Week has finally ended. What a stressful week. I got caught on 2 bad trades, forcing me to do whatever I can to ensure capital preservation. Losing days, weeks or possibly months of work is just not efficient. I believe every trader should have the option or knowledge of 2 or more strategies to implement when trades go bad.
If you have done your homework, your research and trade goes bad, you need to immediately switch gears and judge for yourself which strategy can work best using risk and time as variables to measure which to choose from. Remember, your primary goal is capital preservation. Since I usually close all my trades by Friday morning, I scalped the market. This is the plateau you are seeing from trades 214 to 246.
Scalping requires constant monitoring. You cannot scalp the market if you plan on being outside for the day, it won’t work. So how do you scalp? Basically, you go on Google and download a bunch of EA’s, Expert Advisor, and learn how they operate. The most common scalping strategy is martingale or grid trading. It plays a zero sum game and theoretically, you can never lose a trade. Obviously that’s not the reality since we are still searching for the Holy Grail. Here is an example of martingale:
Martingale is not the Holy Grail, it is very risky and can act as a time bomb and blow up your account. If a trade goes bad, the incremental lots will push your account’s drawdown to higher levels and most likely reach margin call. Now you have no more money. Lots of website promise you a safe martingale or grid trading strategy but they are all time bombs. Sooner or later your account will blow up. Now go on Google and go learn some new exit strategies. Having only 1 exit strategy closes doors to possible opportunities.
This being said, I was able to reach my 630$ goal that I set myself last week, with the account now holding at 633$, that’s another cool +4%. I think next week’s goal is to reach 650$. Capital Preservation and Controlled Risk are very important and should at all times be considered. I am very happy with how things are turning out. After I modified my own trading rules, the account is growing on a weekly basis and the stats are there to back it up.
Before I signoff, I want to show you another example on how it is possible to make money on a bad trade. This is from Jack Schwager himself, he has interviewed the best traders in the world and shares his thoughts.
Watch at 18:05. Trade around your positions.