How to Avoid Trading Disasters
by Dr. Jeffrey Wilde of

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 strike.

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 prevent 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 getting things under control.

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 fashioned way.

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 without losing valuable seconds.

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.


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