to Avoid Trading Disasters
by Dr. Jeffrey Wilde
How to Avoid Trading Disasters.
Let's face it, trading is not an easy game as the rules
are always changing and you never know when disaster will
Nowhere have I seen old "Murphy's Law" so prevalent!
Whatever can go wrong will go wrong especially when you
least expect it during a trade.
There are several ways to keep "Mr. Murphy" from
stealing away all your hard earned profits. The most common
one is through using money management and
carefully placed stops. Since I cover that in the Trade
Master manual I will
not repeat it again.
Instead I want to talk about something that most traders
don't think about
until it's too late. What I am talking about is how to
uncontrollable events from causing devastating losses.
Let me give you an example.
-What happens if all of a sudden your computer crashes
while in a trade?
-What happens if your data provider goes down?
-What happens if your phone line is out and you can't
call your broker?
-What happens if you buy 5 contracts instead of 1 without
noticing it for a
while? Do you know what to do?
-What happens if there is a power loss to your home?
Do you know how to handle any of these disasters calmly
and quickly? If you
don't then I can guarantee you are in for a truly scary
situation in the not
too distant future. I can also guarantee that your heart
will be pounding
and it will be the longest minutes of your life as you
try to sort things
out in the midst of panic!
If you don't know what to do in these emergencies you
can lose thousands of
dollars in a heart beat. Say you are long 5 mini S&P
contracts and you loss
power, the market could sell off 10 points while you are
Here are some guaranteed ways to help you avoid anyone
of these situations.
1. Keep the name of your broker and the trading desk
phone number along
with your account number somewhere you can see it at all
times. This way if
you loss power or your computer you can still get out
of a trade the old
2. Have a surge protector and battery backup on your
computer. This way if
there is a lightening strike or power outage you will
not loss data.
3. Place your broker on speed dial so that you can call
4. Have a cell phone as a backup to your land line.
5. Keep an eye on you data feed light constantly to make
sure it hasn't
stopped. Nothing is worse then thinking everything is
ok and you find out
that the data has been out for several minutes.
6. Practice getting out of these situations. For example,
see how long it
takes to reboot your computer or to find your phone and
reach a real person
at the trading desk. Anticipate all of the above scenarios
and go over in
your head in detail how you would get out.
7. Last but most important is to place a stop loss the
minute you have
entered the trade. Do this always!!! That way regardless
of what happens
you know your absolute risk.
I urge you to take this seriously as it can and will
happen to you if you
are not prepared!!!
This article is courtesy of Dr. Jeffrey
Wilde author of "TRADE MASTER". He is a 14 year
trading veteran with extensive experience trading all markets.