Saturday, February 6, 2010

Cashed Out:

Starting over... again.

Working on developing a system to get me out of weakening markets and completely out of corrections.  But went to cash (90%) to preserve capital in this new treacherous environment.

Rule #1 is don't lose money.

Once you start losing big hunks of money... there's not much else to say.

So the first rule of the new trading I will implement is starting with the question:  How much are you willing to lose on this position?

Once you can define your risk, you can start to trade.  If I don't know how much I'm willing to lose, it will always be much more than I think.

So this will involve proper position size and identifying a support level that must hold.

And secondarily, it involves identifying a benign vs. hostile market.

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