You wouldn’t embark on our day trading journey if we thought you were going to lose money. I think only the most masochistic of gamblers gets into day trading specifically to blow up their trading account. After only a bit of experience, virtually any trader realizes losing money can happen even when that is the last thing on their mind.
So today, I want to focus on the day trading version of a classic baseball pitching by saying – “Don’t give up the big inning.” In baseball, the pitcher has a unique position in that every ball on the defensive side goes through his hands on the way to whatever the result may be. He has “the game in his hands” and his supporting cast of defensive players can only watch and react to what happens after the ball leaves his hands. I propose that YOU are just as the pitcher in the ballgame of day trading. In baseball, a pitcher can lose composure or get tired. Pitches that were hard to hit before now sail from the mound to the other guy holding the bat. It is assumed that on any given day, a starting pitcher is allowed to give up SOME runs, with the based on the assumption that his team’s offense will, in turn, be able to score against the rival team. The game depends on the pitcher not giving up too many runs, especially in one inning. He must make sure to give his offense a good shot at not only equalizing but putting more runs on the board leading winning outcome.
In day trading, this concept is similar. You as a trader WILL lose some trades, but the goal is to not give up so much that your wins can later propel your trading account further than the losses then pulled it down onward to a profitable outcome. But, so often in day trading, as in baseball, we give up “the big inning”. In baseball, a pitcher that gives up five runs in an inning, not only creates a significant deficit in actual runs but creates a psychological gap for his teammates. Not only do they have to get on base, but they have to get A LOT of guys on base, just to “break even”. The same thing happens in day trading. One or two losing trades creates a deficit, but nothing a good win or two can’t fix. But when we start losing a lot of consecutive orders or lose big amounts due to over-risking trades, we create not only a significant financial deficit that’s hard to overcome but also a psychological wall that seems overwhelming. You start trying to make back too much on each trade, just like batters start working to hit home runs at every bat. Instead of piecing base hits together to score, they forget the plan and make stupid mistakes. These types of actions create a dangerous situation in baseball and day trading. In both cases, it prohibits a steady approach to gains.
So, how do you know when to simply “pull the plug” and stop day trading? There are experiences I have had in my years as a trader, that now become red flags when I see them:
All this can be avoided very easily! To ensure none of the above situations ever describe your day trading:
Beautiful day trading begins with a great trader. By focusing on yourself and how you approach the market, you will find that the desired gains come much faster than depending on some external force like the system, market, mentor, etc. You are in charge! Make sure you trade when you are up for it, and you get out of day trading for the day/week/month when you aren’t. Keeping yourself on the right side of your emotions will keep you on the right side of the trade. Remember, the point of all this is to prevent giving up “the big inning.”
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