Newbies Only Part 8 by Trade Aptitude
Happy New Year! The next blog is part of a multi-part process to tune up your trading plan for the coming year. If you haven’t read the prior seven posts, you can find them here.
Brokerage risk is rare but real. Ask anyone who had money with FTX. Keeping your trading accounts with reputable brand name brokers regulated in the USA is the safest decision. If you’re comfortable with offshore and unregulated brokers then start with a very small account and regularly take money out of it. That should give you some comfort that you’ll get your money when you want it, but it won’t guarantee that when you want a large distribution you’ll get it.
Market risk is unavoidable. Major catalysts happen with no notice. Think about the reaction to the pandemic. Your best protection against market risk is a personal financial plan that is diversified among uncorrelated assets. Stocks, bonds, precious metals, real estate, cryptos, art, etc. Your best protection is having multiple income streams from these investments, even businesses.
Technology risk is a certainty. Internet outages, computer or platform crashes, data feed interruptions, all are going to happen eventually. Sometimes at a costly result. The serious trader will perform regular data back-ups and have the highest speed available redundant internet access.
Finally, there is psychological risk. Trading is more emotional than mathematical. How you react to winning and losing trades and streaks will affect your decisions and ultimately your performance. Visualizing these events in advance can help. Your expectations should align with reality. Good books on the subject include Enhancing Trader Performance by Brett Steenbarger, Trading in the Zone by Mark Douglas and Secrets of the Peak Performance Trader by Dr. Woody Johnson.
For the serious trader, Dr. Woody has a fabulous course on the subject. Click here for details.
Our trading teams focus on multiple strategies for day trading futures and high-probability candidates for swing trading options. You can learn either or both risk-free. Join us.
To your trading success,
Mike Siewruk
PS: Feel free to forward this invitation to your trading buddies. Share in the wealth!