Some Trading 'Best Practices'

When we're in the trenches and really focused in on trading, we tend to forget some of the principles that help us become successful.  Not all of them work at the same time but there are certainly rules we need to abide by, lest we become separated from our capital.  It's a cold, cruel world in trader land, and nobody will console you over an irresponsible error or loss.  As the old saying goes, 'want a friend?  get a dog'.

But if we remember some of the 'best practices' of trading then we may no longer be at risk of enormous loss.  Follow these principles and you'll save yourself a bundle in the long run.

The first and best rule to follow is remember to take profits.  While this seems an obvious no-brainer, you'd be surprised how many people forget that is their number one job.  No one ever went broke taking a profit, yet some traders believe they will drive trades home 'to the promised land', which usually winds up being the poor house.  We're in the moving business, not the storage business.

Position sizing is one of my favorite 'pet peeves'.  I've been around the trading world for years and have seen some of the best traders with bullet-proof systems get totally wiped out as they went 'all in'.  It's almost comical if it weren't so tragic.  Size positions in a way that will help you sleep better at night.  I've had nightmares in the past when I had oversized positions, too much risk on the table and ended up taking losses from not being able to handle the size.  If you're out fishing for a 20 lb tuna and you wind up with a 200 pound marlin instead, you'll find yourself in a world of trouble.

Finally, get smarter.  One of the things I encourage traders to do is read more about things they don't understand.  You will find a vast library of material is out there to help you get better trained as a trader.  But it all comes down to experimentation and execution.  If you have what it takes to implement new and exciting tools, you'll be on your way to achieve some great success.