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I foolishly decided to defend my position. (That's a very bad idea, as no one is bigger than the market -- a golden rule to successful traders). As prices tumbled, I added to my long positions, assuming that I would need only a small bump up in price to "get back to even."
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The main point: Trading bigger positions in a bad trading market is ill advised. In markets that move in percentage points and turn on a dime, we should be trading smaller.
I am not saying to close shop, just trade small positions so that you can get out quickly and live to trade another day.
>>Every one of us is human. The urge to trade bigger, trying to get back to even is strong. There is something about the break even point. I am taking some lumps in this market decline, and it is useful to remind myself to trade smaller, not bigger when the market is going against me. The alternative is to be defiant and as in Bolling's story, continue to double up, until a relatively small move can wipe you out. Those traders foolish enough to do that, usually exit the game sooner rather than later.
Positions: short USO, long BUD, MCD
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