It’s been a long week for me, and I am tired, both mentally and physically. I haven’t had time to kick back in my anti-gravity chair, as I spent the warm afternoons catching up on annual ranch chores, the chores left undone since my accident back in October. I pruned the fruit trees, trimmed up the shade trees around the deck by the pond, sprayed the indestructible mallow (again), dug out and moved a rose bush that needed more sun, and I began thinking about cleaning the out the pond (thinking I said, just thinking). Now, the paddock fences need mending as we have a sporadic short, the huge wood pile is begging for the chainsaw, the weed whacker is waiting patiently for my firm grip, and my vegetable garden is crying for a good tilling. Going through the list has made me even more tired …
But I have a job to do, and so I march on …
Is there such a thing as risking too little in a trade? I find myself getting out of trades very quick just to find out the next day or week they do exactly what I was expecting.
You can only risk too little if the amount you stand to make in relation to your risk does not cover the costs of the trade. Other than that, the amount you risk is directly proportional to the amount you want to make – the more you risk, the more profit you can make.
As to the second part of the question … One thing every trader needs to do before he or she makes any trade is decide what type of trader he or she is. Are you a scalper, intraday trader, day trader, swing trader, position trader, guerilla trader, or investor/trader? Although these trader “types” are different to one degree or another, they all have one thing in common – timeframe.
Your obvious consternation about trades doing what you thought they would do only later implies you have not decided what type of trader you are. If you see yourself as a day trader, for example, you should not care how your trade plays out in the next week. If you are concerned you are missing profit, adjust your time frame for your trading. In other words, if you consistently find your trades will make you more money if you hold onto them, well, hold on to them. Adjust your time frame. No law says you have to be a day trader, in and out in a day. It all comes down to how well you understand the broad market and the specific market you are trading. This knowledge determines your trading time frame, whether it be on the minute or over a year.
Your strategy should define who you are as a trader, and maybe that trader is strictly in and out in a day, no trade ever held overnight is the rule. Then again, maybe you want to be a day trader and a swing trader – in and out in a day for one trade, but hold another for five days. Again, no law mandates how you trade. You should however, subject yourself to your own law, which is know what you are doing, why you are doing it, how you will get in and out, and when you will get in and out. You should also know who you are, so you can decide what type of trading best suits you, your personality, your temperament, and your mindset.
Trade in the day; invest in your life …
