{"id":43061,"date":"2016-01-28T13:31:47","date_gmt":"2016-01-28T18:31:47","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=43061"},"modified":"2016-01-29T11:08:44","modified_gmt":"2016-01-29T16:08:44","slug":"do-not-make-this-trading-mistake","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/do-not-make-this-trading-mistake","title":{"rendered":"Do not make this trading mistake"},"content":{"rendered":"<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/xtKdxm2No30?rel=0&amp;showinfo=0\" width=\"600\" height=\"338\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><br \/>\nTrader Frequent Flyer was having another solid day on the month.\u00a0 He was up near 2k, which for his level of experience and skill was strong.\u00a0 The trading session ended.\u00a0 He was up near 10k for the month, with a few days to go. He had just closed out his 5th straight profitable trading session.\u00a0 And then Facebook earnings hit the tape.\u00a0 And then he imploded.<\/p>\n<p>This is a lesson in determining risk for new strategies.<\/p>\n<p>This is a lesson in discipline.<\/p>\n<p>This is a lesson in learning from your mistakes.<\/p>\n<p>Trader Frequent Flyer has 2k of intraday risk.\u00a0 Again he is still a pretty new trader on our desk.\u00a0 He is working on adding after hours trading to his quiver.\u00a0 Which is terrific.\u00a0 What is not terrific is the risk he allotted to working on this <i>new<\/i> after hours trading.\u00a0 He took a 3k rip.\u00a0 He lost 150% of his daily stop on a new strategy he was trying to develop.\u00a0 Yeah so that is not good.<\/p>\n<p>$300 of max trading risk in FB for the after hours as he was building out his strategies is more like it.\u00a0 When building a new strategy your risk should be low until you prove you have edge.\u00a0 Said another way, trade small until you show proof of concept.<\/p>\n<p>After he took this rip, I visited him on the trading floor.\u00a0 I am sure it was hard for me to hide my <i>what the hell were you thinking<\/i> face.\u00a0 He explained how he is used to using automated stops for losing trades and they don\u2019t work in the after hours so he took a larger loss than expected.\u00a0 Whatever.\u00a0 This is professional trading.\u00a0 You need to think about that before taking a loss too large.<\/p>\n<p>I asked him in a follow up email what he learned from his after hours trading losses.\u00a0 He responded highlighting overconfidence and excessive risk as issues.<\/p>\n<p>Trader Frequent Flyer will learn from his mistake.\u00a0 What is most surprising is he is one of the most disciplined traders on the desk.\u00a0 I would not expect such a mistake from him.\u00a0 I share this trading anecdote because if this is something he struggled with, I am sure many of you might as well.\u00a0 Trader Frequent Flyer will become a better trader learning from this mistake and eventually develop a profitable after hours strategy for him.<\/p>\n<p>Having said that&#8230;.don\u2019t make the mistake Frequent Flyer did with your new strategies.<\/p>\n<p>Tomorrow I will write about a mistake much worse <i>I made<\/i> in trading CRUS.<\/p>\n<p>*no relevant positions<\/p>\n<p><b>Related posts<\/b><\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/two-trading-mistakes-to-avoid\">Two trading mistakes to avoid<\/a><\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/avoid-these-mistakes-most-options-traders-make-when-trading-weekly-options\">Avoid these trading mistakes in weekly options<\/a><\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/one-mistake-your-broker-is-glad-youre-making\">One mistake your broker is glad you are making<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Trader Frequent Flyer was having another solid day on the month.\u00a0 He was up near 2k, which for his level of experience and skill was strong.\u00a0 The trading session ended.\u00a0 He was up near 10k for the month, with a few days to go. He had just closed out his 5th straight profitable trading session.\u00a0 And then Facebook earnings hit &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/do-not-make-this-trading-mistake\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[619,38],"class_list":["post-43061","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","tag-mistake","tag-trading","no-post-thumbnail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Do not make this trading mistake | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/do-not-make-this-trading-mistake\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Do not make this trading mistake | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Trader Frequent Flyer was having another solid day on the month.\u00a0 He was up near 2k, which for his level of experience and skill was strong.\u00a0 The trading session ended.\u00a0 He was up near 10k for the month, with a few days to go. 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