One Way to Eliminate Fear and Greed While Day Trading
It is a known fact that fear and greed can be a trader’s worst enemies. I’ve found one way that has helped some clients deal with fear and greed and their cousin, “getting out of winners too soon and staying in losers too long.”
What is it? Entering multiple contracts
In order to enter multiple contracts while day trading, one has to have the appropriate risk capital and margin requirements. But the advantage of trading more than one “unit” or splitting your trading size into two or more parts is as such:
If you enter a trade with one contract (or if you are treating your trading size as one unit, meaning you enter a trade with 4 contracts and exit the trade with 4 contracts), you can face a very quick dilemma (especially when day-trading). Consider the two following scenarios:
1. You get in and very quickly you are up 2 mini SP points…what do you do? Do you take profit? Bring your stop loss closer? How do you avoid getting out too early or too late?
2. You enter a trade and it goes against you rather quickly…if you get out then it is a loser…but the little voice in your head says “what if the market goes back up?”
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