The first of many "Oldies but Goodies" from the old Whore blog (thankfully archived).
This one originally posted on August 8, 2007.
This one originally posted on August 8, 2007.
Cryptic title? No,I just want to emphasize something I have grown very aware of and very thankful for...the small trade. I NEVER under-estimate nor invalidate the power of the lowly small trade. Sure, we'd like all our trades to be the HUGE shakers & movers, but that's not realistic: at least not for me. Read on and draw your own conclusions, ok?
What can I say? I have learned to love the lowly and neglectedsmall trade. Why? Because when you use the spreadsheet and good money management, it becomes real clear, real soon that you don't need to go three days without sleep, make a gazillion entries, rack 100+ pips a day, 50 pips, or for the most part, much more than 15 or 20 pips to meet ADG and become nasty rich. Really, all it requires is one decent, solid trade of 10-20 pips or more once a day or 50 pips a week. Why be greedy? Of course, it's wonderful to get more, but doesn't this make things easier, rather than more difficult & complex? 200-1000% of my ADG each day is nice, but I can also be just as happy taking 100% over nothing at all. This is where the small trade shines, par excellence. Check it out if you think you might enjoy trading less & trading better.
Now I know exactly what you are probably thinking...and I am not talking about scalping here (my definition of scalping is anything less than 10 pips). I can become a fatcat just as easily off a never ending series of dinky trades as I can off the WHOPPERS; it might take a little longer; but, in the meantime, guess what? I won't overtrade as much or LIVE in front of my computer screen night and day. Most importantly, I free myself from the inevitable failure of self-imposed sabotage that always comes hand-in-hand, married to the ridiculous expectation that I MUST catch the very first pip of every big move and nail the final one, otherwise, I guess I am really just a lousy trader! HUH? You mean I don't need to suffer for my trading in order to be successful? Can you say, "relief?" There's also A LOT to be said for reducing exposure to the market by NOT giving money back after working so hard to make it in the first place.
What the small trade lacks in sexiness & excitement, it more than makes up for by allowing me the opportunity of NOT having to work soooo hard and long at trading. In my book, that's certainly worth something, as not everything in life can be measured strictly in terms of money. If I can make only ONE trade/day and net 20-50 pips; all the while, meeting or exceeding my ADG and at the same time limiting my risk and exposure to the market...WHY the heck not? Then I am DONE for the day and get to go do other things besides trading; giving both my life and trading more balance in the bargain. When it becomes my passion to do this day-in and day-out, It becomes undeniable that what I am basically doing every day is making the same trade, over and over...and getting darned good at it! I start to see my account value grow...and isn't that where the rubber really meets the road ? If I can stay patient and disciplined, I can and will keep doing this until I am crazy rich.
So in your big rush to get to the bank with all those dollars, don't overlook the small change under each step you take.
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