Day Trading - Don't get Greedy!
by steve loughlin
Since I publish the trader’s site: www.BanzaiDaddy.com, I’m always gettingfriends trying to get that ‘golden nugget’ of information from the horse’smouth ( that would be me – sometimes it’s a different end ).More than questions, I get the statements : “Man, if I had your informationand trading knowledge – I could make a ‘killing’ in the market!” or“Why settle for a little each day, when you could Really clean up?”My answer ? Don’t get Greedy !Once you start trading, it’s easy to find yourself in this destructivepattern…As a beginner, you start out just wanting an extra $100 a day – maybean extra $ 300 a week. You get lucky. Fantastic trades seem tocome easy – too easy. Now that $100 a day is bumped up to$300 a day and that weekly goal gets pushed up to $1,000.You start to let the dollars get in the way of common sense. Youfigure if it’s this easy to make money trading – maybe I’ll increasethe amount of contracts or the number of shares I trade.Suddenly instead of trading 500 shares, you’re trading 1,000.Instead of sticking with one or two contracts on the emini, you’repunching in five or ten contracts!You figure, what the heck…this is like taking candy from a sixyear old!Then one day, after weeks of endless wins – the real world hitsyou in the face.That 10 contract trade on the Mini Russell all of a sudden startsto turn against you. You stare at the screen in disbelief…This can’t be happening! I’ve been trading this technical pattern for three weeks without one losing trade!In your cockiness, you’ve stopped using stop loss orders and nowyour trade is dropping – and Fast! You just ‘know’ it’s going toturn around any minute. You also know that with the Mini Russell each point per contract equals $100. You’re trading10 contracts ( because that’s the way to make the Big Bucks –right?). That means for ‘every tick’ – you’re either making orlosing $100 !You hold and hold and hold…Seconds go by like hours.You’re frozen. Common sense tells you to ‘bail’. That greedylittle voice in the back of your mind tells you to keep watching.When your pain threshold reaches the limit, you hit the panicbutton and place a market order to dump everything! Now!You’ve managed to make $4,000 in the past few weeks andin one fell swoop you’ve just lost $5,000 ! And hopefullyyou’ve learned a lesson – Don’t get Greedy.Trading large ‘can’ make you a lot of money. It can alsotake it faster than you made it.Since I trade the eminis, let me give you an example of tradingjust ‘one’ contract at a time.We’ll assume you will trade five days a week – 50 weeks a year.Holidays won’t be taken into consideration…We’ll also use Five (5) points a day as our target and no commission will be figured.Trade the S
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