Trading Guidelines

[Trading Reports, News  & Event whipsaw]

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Last week's whipsaw in most instruments in a short window is a good example of why one should avoid trading during reports, news & major events. It is tempting to enter a trade when there is so much price action in a short window.

 

But what most small traders fail to understand is that the institutional algos understand this crowd psychology and keenly set their 'greed & fear' trap to take home easy money. Retail traders fall into this trap over and over again until they blow up their accounts. 

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What is more worse is when small traders make some money trading reports by luck, the first few times. Then, they feel invincible and make it a habit out of it becoming more and more reckless. Over trading & revenge trading follows.

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Build the habit of only trading the chart using appropriate risk management [1% rule], so that you are not as worried about the money on any single trade.

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TRADE THE CHART, NOT THE MONEY is the best advice we got in our early days.

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