Re-Think Your Trading Program

If you don't put only part of your expected position on at the start of a trade, and if you don't have a plan for adding to your position - prior to entering the market - then you must re-think your trading program.

This is not expected thinking, without proper planning. Remember, Rule 2 will not show itself to you after you have made mistakes in the market. You will only learn the benefits of Rule 2 by experiencing the positive effects, or by careful reflection on the hidden benefits of using Rule 2.

Consider the favorable side of adding to positions when they are
correct;

• Reinforces the correctness of your thinking
• You are larger when correct
• Prevents over-trading
• Reduces the desire to be right

You must know why and how to press your winning trades before you will ever be able to incorporate the idea into your trading plan. Correctly executing these rules helps reduce the statistical risks of trading, but also guard against emotional risks in trading.

Next Post - on the Desire To Be Right, and how Rule 2 protects you from your own Ego.