The Phoenix Account
I've blown up my E-Trade account. There's not much left in it. I've considered merging it into my main account, since the value has dropped to just $840 from a high of around $70,000, but I'm not ready to throw in the towel just yet. I decided to keep the account around and try to rebuild around a new strategy.
If this is going to work I need to learn from my mistakes and develop a sustainable trading strategy. I've had many positive trades but I've committed the common mistake of holding losing Positions for too long.
With this new approach I'd like to focus on a few key items:
Stop the loss.
As the saying goes, if you find yourself in a hole stop digging. With an account this low my options are limited until I rebuild my funds. I can't effectively day trade until I have 25k. Loses should be limited. I must learn to let go of bad trades early. Most of my trades have been green but I let several losers burn me. This is a top priority if I can't get this one right I'm fucked.
Don't swing for the fences.
I've had a hard time with this one. The desire to make up for lost ground is strong. When the account was larger it was easy to make a few hundred in a trade. Replicating that with a smaller account means taking on riskier trades. A $10 dollar profit might seem like nothing but an account below a thousand that's going to be more than a 1% gain. I need to remember the size of my account when taking profits, it might feel like it's taking forever but increasing my account by 1% per day will add up in the long run and is a phenomenal rate of return.
Don't force trades.
I need to be careful with my trades. Since I'm trading with cash there's only so much I can do in a day. Also, I can't afford too many bad trades. It's better to sit the day out sometimes. Not losing money is almost like making money.
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