Earn the Right to Size Up

How many times do you need to blow your account up to become a successful trader? The answer is a big FAT 0. Yes, that's right. Regardless of how little money you have in your account, you DON'T need to blow it up in order to feel like you've achieved something. It's not cool to blow up your account but yet, some people wear it as a badge of honour. I see so many new traders sizing up far too soon without first having a profitable trading system and secondly, experience trading that system successfully. You need to EARN the right to increase your position size, so if you're not yet profitable you should: 1. Paper trade if you're still not familiar with your system. 2. Risk less than 0.5% of your account on each trade - it would take 200 consecutive losses to blow up your account (if you manage this feat, then you deserve an award for the world's worst trader). 3. Spend thousands of hours studying thousands of charts of different setups, just to understand price action. 4. Record all of your trades in a trading journal like Edgewonk or TraderSync. A custom made Excel spreadsheet with all the relevant data is fine too. 5. Once you've discovered some profitable setups (tip: don't go crazy testing out every setup - focus on 2-4 setups that resonate with you the most), work on refining them to increase your Profit Factor. Whatever you do, do NOT increase your position size until you've proven that you can be consistently profitable with your setup/s for at least 6 months but preferably one year. You should also be backtesting and/or studying how your setup/s perform according to different market cycles - if it doesn't perform well, then you'd have to trade a different setup or remain in cash during certain periods. The goal during the learning phase of trading is exactly that - to LEARN; not to become rich. The latter will come quicker but only if you manage not to keep blowing up your account.