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Brian,
When I first came to the CBOT as a floor trader one of the traders I got to
know was a very successful guy and he he told me how he handled the very
problem you mention. He told me that over many years he had developed a
couple of rules: If at any point in the trading day he was down over 2000.00
he would flatten his position and go home because his observed tendency was
to press to get his losses down and inevitably he made the loss worse. If at
any point he was up by more than 4000 he would ease out of his position and
as soon as he was flat he would go home because history indicated that he
tended to be over willing to bet his winnings in hopes of a big score and
inevitably he gave back profits instead. His point was that for him those
were the levels where he began to trade his money instead of the market and
that was fatal. I found this to be a very useful lesson although obviously we
all have different levels at which these kinds of deleterious behaviors
effect us.
Good luck finding your own levels. Stay alive, the market will be open again
the next day.
Bruce Lawrence
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