There are days when you don’t want to have too many trades on. Today is one of those days. S&P500 was down 20 points in the morning (it recovered all morning losses already, or almost all).
Selling like this have negative impact on the comfort of your trading. So if you have too many trades on, short on available cash (or God forbid all in) days like today will crush your mood significantly. When you wake up in the morning and see all your positions red you will start panicking and acting irrationally (if this ever happens to you, than before you touch your keyboard, close the computer and go outside. Go away from it and forget that there is any Wall Street out there. It’s not worth it to act under a heart attack…
So, stay small. Set a limit of how much money you can commit to trading and do not exceed that limit. No matter how tempting it may be to open yet another trade. Set a limit which will make you comfortable. Start with 10% for example and as you gain confidence, add a bit more to it. But never exceed that limit. Unless you are happy to lose all your money.
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