ing of value well you are going to bust your account and likely sooner rather than later. Why you ask, well because when you’re in a live trade and you have “real” money on the line you react much differently to being in a loss position than when it’s play money. Oh I can assure you as strong willed as you think you arIt seems every day some new and up coming superstar day trader (ok wannabe superstar day trader) asks me the same questions. It always strikes me as funny that everybody always seems to have the same questions when to me the answers just seem so obvious.

I will admit I’ve been trading for a while now and I’ve seen and read all the doom and gloom numbers about how 90% of all day traders bust their accounts in the first year. Why? I mean seriously why does this keep happening over and over again? I think it boils down to a couple of really simple but important rules that too many new traders either don’t learn soon enough in order to save some of their trading capital. Or they don’t really understand the concepts. Let’s look at a couple of the major ones that you have to understand and have mastered before you can really hope to earn a living at this day trading game.

First of all and I know this will ruffle some feathers, I am not a big fan of demo trading accounts. I know some old time traders swear by them. But the way I look at it, is if you want to demo trade to understand how your platform works, how to place different types of orders etc, ok do it. But if you honestly believe that placing fake trades with fake money is teaching you anything of value well you are going to bust your account and likely sooner rather than later. Why you ask, well because when you’re in a live trade and you have “real” money on the line you react much differently to being in a loss position than when it’s play money. Oh I can assure you as strong willed as you think you are

seen and read all the doom and gloom numbers about how 90% of all day traders bust their accounts in the first year. Why? I mean seriously why does this keep happening over and over again? I think it boils down to a couple of really simple but important rules that too many new traders either don’t learn soon enough in order to save some of their trading capital. Or they don’t really understand the concepts. Let’s look at a couple of the major ones that you have to understand and have mastered before you can really hope to earn a living at this day trading game.

First of all and I know this will ruffle some feathers, I am not a big fan of demo trading accounts. I know some old time traders swear by them. But the way I look at it, is if you want to demo trade to understand how your platform works, how to place different types of orders etc, ok do it. But if you honestly believe that placing fake trades with fake money is teaching you anything of value well you are going to bust your account and likely sooner rather than later. Why you ask, well because when you’re in a live trade and you have “real” money on the line you react much differently to being in a loss position than when it’s play money. Oh I can assure you as strong willed as you think you ar

order to save some of their trading capital. Or they don’t really understand the concepts. Let’s look at a couple of the major ones that you have to understand and have mastered before you can really hope to earn a living at this day trading game.

First of all and I know this will ruffle some feathers, I am not a big fan of demo trading accounts. I know some old time traders swear by them. But the way I look at it, is if you want to demo trade to understand how your platform works, how to place different types of orders etc, ok do it. But if you honestly believe that placing fake trades with fake money is teaching you anything of value well you are going to bust your account and likely sooner rather than later. Why you ask, well because when you’re in a live trade and you have “real” money on the line you react much differently to being in a loss position than when it’s play money. Oh I can assure you as strong willed as you think you ar

ot a big fan of demo trading accounts. I know some old time traders swear by them. But the way I look at it, is if you want to demo trade to understand how your platform works, how to place different types of orders etc, ok do it. But if you honestly believe that placing fake trades with fake money is teaching you anything of value well you are going to bust your account and likely sooner rather than later. Why you ask, well because when you’re in a live trade and you have “real” money on the line you react much differently to being in a loss position than when it’s play money. Oh I can assure you as strong willed as you think you aring of value well you are going to bust your account and likely sooner rather than later. Why you ask, well because when you’re in a live trade and you have “real” money on the line you react much differently to being in a loss position than when it’s play money. Oh I can assure you as strong willed as you think you are, when that first trade moves in a hurry against you and you see the loss mounting I don’t care how experienced you are panic does start to set in. So how do you deal with this and all the other head games that the market plays on you?

Rule number one, risk. Yes risk you never ever risk more money on any one trade than makes sense. Of course we all have different levels of risk tolerance that goes without saying. But if every time you open a trade you have your whole bankroll riding on the trade how many times do you think you can be wrong before your trading days are over and you’re looking through the want ads again? I suggest you never risk more than 5% of your account on any one trade. That means whatever you are trading you set a hard stop loss that if hit would not eat any more than 5% of your capital. I know some people are even more strict and wouldn’t suggest more than 2 or 3% but % is fine in my eyes.

I know of a couple of traders that don’t think twice about putting 40 or 50% of their account on the line every time they open a position. Well all it takes is two or three bad trades in a row and poof they are finished, account busted. Let’s look at some numbers just for the same of argument. I like to trade the S&P Emini, each point has