Managing an Emini Futures Trading Draw Down

By Chris on 2012-05-14 in E-mini Trading (0) Comments

Managing the Dreaded emini Trading Draw Down

One could argue that trading unusually well could be a bad thing sometimes. Every trade you make including those outside your normal trade plan adds to the size of your account! How can you go wrong right? You might take trades you probably wouldn't have before, but they're working for you so why stop? You've mastered the market!

How You Get Into a Trading Slow Down

Many traders will go through spats in their trading where they simply can't lose. So what's happening during these series of trades? Your building what we call "ghost habits" that are destroying your future ability to make profits. Every time you place a trade good or bad you've lost a little bit more discipline and gained a lot more future pain. Your trading is becoming that of gambling and luck. This luck is leading to those "ghost habits" we try to over come. These are hidden agendas buried deep within your internal Central Processing Unit(CPU or Brain) that will flash in and out during the good and during the bad trading days. Of course when it hurts is normally during the bad trading days. Your magical market calls begin to not workout as planned and you have a draw-down in your account that begins to change the whole dynamics of your trading style. You've lost the very discipline that got you there and I'm sure you've lost the "physical" trade plan you once spoke so highly of.

How To Get Out Of a Trading Drawdown

So what do you do now once you've let your trading get to this point? You simply start over in all aspects of your trading. Bring your contract amounts back down to reality and limit your trades to only the best trades throughout the day. Sounds easy doesn't it? Try it for a day and see if you can hold out. Establish a set amount of trades for which you will extract your profits. Re-read your trade rules and begin to place trades again. Of course your learning curve is dramatically cut short due to your previous sills and knowledge so you don't need to wait months to begin implementing size back into your trading. Understand that size comes with discipline and without that you will do nothing more than cause more damage to your own trading mindset. Trading a lower amount of contracts allows you the ability to regain good habits that may take time to re-develop without damaging your account beyond repair. If you start tweaking and adjusting to get your trading back to normal with size you are unnecessarily damaging your account. This truly is the only business of which you can perfect and practice with growth coming at the click of the mouse.

Realize emini trouble before its becomes trouble

It's important to realize these times in trading where you could be developing bad habits and regroup even if things are going well. Always understand what is going on and when you feel yourself starting to slip, pull it back a bit and bring yourself back to reality. You don't want your trading to snowball out of control so put yourself into damage control immediately, bring your contract sizes down, regroup, and trade with confidence.

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FULL RISK DISCLOSURE: Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.



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