Lessons from Trading Stocks, Forex and Commodities


During my life I have been trading in stocks, currencies and commodities. Lately I found a document I once wrote to myself on my Google Drive folder. The name of this document was called Trading Lessons. After finding the document I was searching for a folder on my external hard drive where I had saved pictures of my transactions with my comments on it. So, here is the short summary of words I've written down for myself.

Don't pick sides

You might like a sports team but that doesn't mean that they are going to win. The same goes with trading. Don't let emotions get in the game. It's easy to fall in love with a stock, currency or commodity. But in most cases it's not related to the rational reasons but emotional connections instead. The easiest way to overcome this is to take the calculator, push your emotions and beliefs aside and do the basic math. When that is done then do some deeper analysis about the current situation and future possibilities. Mark down future events and influences.

Don't chase the bet

Sometimes you might have missed an opportunity and feel desperate to catch the train that has already taken off. You might get some small gains out of it but eventually it's too much of a risk. The main reason comes down to the emotions, again. The thing is. While you know that you probably missed the best trade out of it you already are emotionally connected. The mindset of "I have to get at least something out of the missed opportunity" is making you blind against the changes in the trades profitability. While trying to chase those missed gains you might miss some important information that is coming along the way in the meantime. Just do your homework and wait for the next move.

Don't stack on short timeframes

Never ever stack your positions up inside a short timeframe. If the market is not moving then it's not moving. It doesn't mean that you need to put more in to get it moving. The more you stack your positions the bigger the possibility that when the market is finally starting to move and picks up a direction that is not in your favor you are going to loose big. The more you stack the more you loose. And if you got it wrong, let it go. Let it go small. Sometimes it's good to make yourself a rule that you are not going to place more than x amount of running positions during y timeframe.

Look at the big picture

Jumping in the market without knowing the big picture is the same as going to the grocery blindfolded and hoping to grab the right goods. If you don't know what is going on in a bigger timeframe then you might come across a big surprise. You had no clue of what is coming. But then again how could you know if you didn't do the homework earlier. There's always a new day, new opportunities. Don't just jump in without preparations.

Last update: 2018-05-04 (Y,M,D)

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