I’m about to go against every desire in my body to tell you this…
Trading less can make you a better trader!
But what exactly does it mean to trade less and how can it help you?
That’s what we’re here to discuss today.
Crazy as it sounds, this concept applies to most people I’ve met.
And a big reason I launched my Double Down service.
You see, not everyone can spend all day in front of the charts.
Even when I’m not in front of the screens, I’m still in front of the charts!
Even I find it difficult sometimes with the responsibilities of four kids, a puppy…you name it.
So you might be surprised to learn that sometimes cutting back on the number of trades I take improves my success.
Part of it is psychology and part of it is math.
What you need to decide is which or both of these apply to you.
The focused trader
While it’s something we value in our culture, human beings aren’t meant to be multi-taskers.
Our brains are wired to filter out noise, allowing us to focus on the task at hand.
When we divide our attention across multiple trades, we increase the chances that of screwing something up.
It can be as mindless as fat-fingering a trade.
More likely, we miss our entries or stops or forget to put them in entirely.
Even one instance where you forget to put in your stop loss can lead to catastrophic losses.
I’m speaking from experience!
Picking prime setups
Try this challenge in your head.
Imagine you were limited to three trades per week (something pattern day-trading causes).
How would you pick which trades you go with?
While we should go for the best setups, many of us actually go for the first setups.
When you trade fewer setups, this weird thing happens, especially with newer traders and those with small accounts.
We think there will never be a trade around the corner. If we miss the one in front of us, that’s all there is to life.
It’s one of the reasons my Double Down service can help people.
By giving them two of my best trade ideas per week, subscribers can focus on the trade.
They don’t need to worry about whether another setup will pop up because my job is to get them two per week.
For newer traders, I would go with simpler setups.
While I’m an advocate scaling into and out of trades, basic setups with one entry, stop, and target work just fine.
In fact, they can help you hone in your skills and optimize your setups.
It’s much easier to tweak one entry or exit than it is to with multiple.
How much is too much
What defines too many trades per week?
The answer is different depending on your situation.
If you’re like me with a family, plus you have a full-time job, then anything more than once a day is probably going to be an issue.
For some folks, once a week is all they need.
I know traders that make a living with one trade a week.
Someday I hope to change my trading around so that I can spend less time in front of the computers!
There are a few guidelines I recommend when deciding how many trades you should max out at per week
- Don’t have any more than 50% of your trading account in play at one time, even for small accounts.
- No trade should make up more than 5%-10% of your portfolio. 10% is only for small accounts where 5% isn’t really doable.
- You need to be able to log your trades in a journal and jot down all relevant information.
- If you’re limited by pattern-day-trading rules, then three trades per week should always be your max.
- When you need to execute or manage your trades, you should be able to do so comfortably without feeling rushed.
Try starting with three great setups per week
I’m going to give you a challenge.
Try limiting yourself to three trades per week on a smaller account or even a paper/simulated one.
See how far you can get just doing that. I bet you’ll be surprised.
And listen, there’s always something to work on.
That’s why I created my Double Down.
With two of my best trade ideas per week, you’re almost there for the challenge!
I will teach you some of the same skills I used to turn $38,000 into over $2,000,000 in two years.