When you go live in day trading, it’s a decision that shouldn’t be rushed. Learn and know your system because how can you win if you don’t know why you’re winning?
I had a rough trading day a few weeks back, and I went back to sim trading for the rest of the week.
If you have a bad day with crazy FOMO and revenge trading, just go back to sim for a couple of days. This journey isn’t going to happen overnight.
The decision to go live should not be a quick one, and you should be confident in your system before doing so.
You should have enough data collected to know what your system results are day in and day out or over a few weeks (the more the better), so you know if you’re trading the same live as you do on sim.
You should be trading the same; don’t shoot for the fences just because you’re on sim. Trade with discipline and strict risk management.
I noticed it when I first went live that my results were a little bit different. I was afraid to lose. It’s natural. I went back to sim for 2 weeks and had 2 green weeks. I know why I was trading differently, and now I was confident and ready.
You can’t be confused about why you are making money or losing money. How can you improve if you don’t know what you’re doing right?
Create Your Trading Plan Before Going Live
So, I got into a good place and rhythm after that. Green days turned into green weeks.
We can’t let one bad trading day take us out of the game.
It hurts losing money, but what really hurts is losing money because we’re doing something that has nothing to do with our plan.
Imagine we destroy our account for a stupid reason because we didn’t follow our rules, and when the dust settles, we’re sitting there saying “what the hell am I doing?”, been there, done that.
So, I got this daily loss limit setup, but my rule is to never let it get triggered. So far, so good. If it did get triggered, I definitely did something wrong and need to step away from the screens. I know we all want to rush and get to the end game, but as cheesy as it sounds, this is a marathon, not a race. Write down rules, take notes daily, and re-read everything you wrote during the weekends.
Position Sizing: The Math That Matters
So there’s a rule a lot of people talk about, and that’s the 1%, where you never risk more than 1% on any trade. I don’t think you should follow this rule, because every trade is different.
Some trades are an easy win (ok, I shouldn’t say easy), but why would you risk the same on a trade that you’re very confident in, compared to a trade that “might work”? Take both trades, but don’t risk the same amount.
The Emotional Side of Risk Management
The thing with risk management is you have to follow your rules. It’s easy to write down your rules on a piece of paper, but if you have a rough day and you double down to get your money back, that’s how we lose.
We’re not in the business of hoping; we’re in the business of winning, and we win by taking small risks over and over and slowly growing our account over time.
While the 1% rule sounds like it would work well when you get a 2:1 or 3:1 risk-to-reward, it’s easy math, right?
The thing is, you’re going to have a lower win rate, and psychologically, I just can’t handle losing over and over.
I would rather have a higher win rate and just take small profits out of the market over and over again.
I take small bites out of the market 10 to 20 times a day with a relatively high win rate, but I need to manage my losers, and by manage, I mean cut them fast, real fast.
I don’t simply set a stop loss and wait for it to be triggered. If I see things are not going my way, I cut the trade quick and move on. There’s always another trade.
Conclusion
Well, this was supposed to be about when to go live, but it kind of turned into a mishmash of that plus risk management.
I just want to be honest, because we all go through it. Just know your system before you go live, and try to be on a strong platform. Take notes so you don’t repeat stupid mistakes.
When you’re on sim, treat it as if you’re live, because you need that data, but you also need that confidence, and you can’t build confidence if you’re throwing Hail Marys to finish the day in the green. It doesn’t work that way.
Be honest with yourself; if you’re trading on sim and losing, figure out the problem. There’s no sense going live if you’re losing consistently on sim. Makes sense, doesn’t it? Trade and practice as a professional; anything else is gambling.
