Click here to get a PDF of this post

2015 has been a year. The market went from swing trading to a downward plunge so fast and deep that it ruined many traders that were holding long positions with too much leverage. Broker’s servers have made it difficult to trade profitably with many becoming overloaded and failing at crucial times. The stock market’s recent plunges and volatility are on the scale of 2000 and 2008. We will all remember exactly what we were doing and what our positions were on the morning of August 24th, 2015 as the DJIA plummeted 1,000 points. I was flat with no positions, but still could not believe what I was seeing, and personally had trouble trading when my broker’s server became overloaded— it cost me money on my exit. There are many traders that were ruined mentally and/or financially this year. I have been through this mess before and I know how to survive. Here are my tips for surviving as a trader in 2015.

  1. Stay focused on your trading signals and not your personal opinions during wild price action. No signal, no trade.
  2. Don’t stay wrong for long. My losing trades generally last less than 24 hours, while my winning trades may last for weeks and months.
  3. During volatile markets, trade small and trade less so you lose less when you’re wrong.
  4. Realize your trading edge plays out over months and years, not hours and days. Approach your trading with a long term perspective. You will have drawdowns in capital, but you can still be profitable during smooth trending or range bound markets.
  5. Position size to keep yourself from ruin by limiting losses to 1% per trade and 3% per day in a worse case scenario.  This is determined by position sizing based on where your stop loss is set and not referring to total position size.