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Want to know the fastest way to blow up a trading account?
Bet the farm on one trade.
That sounds obvious, but traders do it every day. They find a setup they love, convince themselves it cannot miss and load up because they are “sure” this time.
The market has a way of curing that kind of confidence.
Let the Trade Prove Itself
I take the opposite approach. If I’m testing a new pattern, I might buy one share. One. I want to see how the trade behaves before I put real money behind it.
When I’m less certain about a setup, I size down. When the market is acting strange, I size down. When volatility is high and everybody on television suddenly becomes an expert, I size down.
That’s not being timid. It’s staying alive.
Trading comes down to probabilities, not guarantees. You can do everything right and still lose. The setup can be solid. The entry can make sense. And the market can still turn around and punch you in the face.
That’s why position sizing matters more than most traders realize.
Lose 50% of your account, and you need a 100% gain just to get back to even. Lose 80%, and you need a 400% gain.
Good luck with that.
The deeper the hole gets, the harder it is to climb out. Proper position sizing keeps you from digging a hole so deep that you need a miracle to recover.
Annoying Beats Devastating
My rule is simple: If a trade going against you would ruin your day, your week or your month, the position is too big.
Scale it down until the potential loss is annoying, not devastating.
You can recover from an annoying loss. A devastating loss can take you out of the game, financially or mentally. Sometimes both. And a lot of people who blow up their first account don’t start a second one.
Before entering any trade, ask yourself one question…
If this goes to zero, how much do I lose?
Don’t tell yourself it can’t go to zero. That’s how traders get into trouble. Run the numbers and look at the actual risk.
If the answer makes you sweat, cut the position in half. If it still makes you uncomfortable, cut it in half again.
Trade small enough that you can stay calm when you’re wrong — because you will be wrong sometimes. So will I. So will every trader who’s ever placed an order.
The goal is not to avoid every loss. The goal is to make sure no single loss can knock you out.
You cannot catch the next winner if the last trade took all your money.
Jeffry Turnmire
Jeffry Turnmire Trading
I host my Morning Monster livestream at 9:15 a.m. ET each weekday on YouTube, and then 30 Minutes of Awesome at 5 p.m. ET each Tuesday!
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Important Note: No one from the ProsperityPub team or Jeffry Turnmire Trading will ever message you directly on Telegram.
I’m just a regular dude in Knoxville, Tennessee: a husband, father, civil engineer, urban farmer, maker and trader.
I’ve been at this trading thing with real money for 20-plus years, and started paper trading over 35 years ago. I have a knack for making some epic predictions that just may very well come true. Why share them? Because I like helping other people — it’s the Eagle Scout in me.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. 1% a day? This Kind of Consistency Should NOT Be PossibleÂ
Take it from me, the daily tactic I’m about to show you is arguably the most consistent setup I’ve come across…
Over 172 trades and counting without a single loss, all because I’ve struck upon one of the market’s most consistent daily patterns.
