It’s quite easy for us trading veterans to sniff out whether a blogger is writing from personal experience or just copy paste (more polite word for plagiarism) from some other official sources.

To a “bei kambing” or “white paper”, since you know nothing, you’ll just swallow hook, line, and sinker wholesale. That’s until you have chalked up more experience points and now looking back, you’ll just laugh it off.

It’s part of the journey.

Never risk more than 2% of your trading capital per trade

Let’s take the above risk management rule as example.

Can’t go wrong with parroting this rule right? Wrong!

One, you reveal to the world you are NOT a trader. (I never understand such financial bloggers. Don’t trade but like to write about trading stuffs!? For pageviews?)

Second, if you do actually trade part time, that will put you in the same basket with those people who say one thing; but do anything. Be honest now, do you employ that 2% rule in your own trading?

Institutional trading not the same as retail trading

That 2% rule is meant for institutional or proprietary traders.

Depending on the institutions, some may argue 2% is too risky! Some have a more conservative 1% or 0.5% limit on their trading positions.

For a bank forex trader, if you employ a 2% limit on your $10 million position, you are risking $200K per trade!

If you are his boss and this trader is inconsistent, would you allow him the full 2% limit?

And if you have friends who are trading their own money full time, go ask what limit they use when they first started out.

I guarantee you the majority of them would have used a limit greater than 2%!

Don’t just believe what I say, verify for yourself. Wink.

Ownself check ownself

If you are already trading part time for sometime, no need to ask others.

Yup, that’s the reason why the majority of retail traders blow up their trading accounts.

But if we had stuck with the 2% trading rule, we would be “eating grass” when we win… And that’s not what we have signed up for… Didn’t we?

Intermediate to Advance trader

How to know your have improved as a trader?

Most people may think of trading account size. Yes, its a factor. But not the most important yardstick.

Its this fuzzy, grey, and vague thing called Wisdom.

I know, the left-brained precision people will raise you arms in despair! You can’t put a SMART goal to wisdom!

LOL! (Its not that I don’t set goals or make plans; I just set them different. Wink)

Wisdom comes from experience. Knowing when to bend the rules, when to break them. When to verify and dig deeper, when to disregard “noise” or “falsehoods”.

And that’s different from Knowledge.

Any studious trading newbie can “out knowledge” a trading veteran. What’s the definition of this and that; who said this and that; parrot, parrot, parrot. Sure score distinctions in a trading theory test!

Me?

When I started out trading full time 4 years ago, I employed a 5% limit on my trading positions. Now that my trading account has grown by quite a bit, my trading limit is now closer to the 2% limit.


Singapore Man of Leisure (welcome to my blog; just google it!)