General Trading Rules
1. Position size. Besides following a challenge account, you should MOSTLY use a strict rule of no more than 5% of your account per trade and look to not lose the entire amount. For example, if you have a $5,000 account, your position size for each trade should be no larger than $250 or $50-150 if you are sizing for zero (willing to accept full loss). If you have a smaller account, this might mean that you won’t be able to take a lot of trades, but trust us on this one – it will save you from blowing up your account.
Those who are new remember I only average down on plays that I think will come back hard otherwise standard 3-5% account each play that I post in General Signals.
- Half size 1-2.5% each
- Normal (no comment next to it) is 3-5%
- Double or an add is double the previous
- Heavy means 15%+
2. Stoplosses. Admins will always signal their entries/exits. If they haven’t, that means the trade is still open. You are more than welcome to set your own stoplosses (if you do so, ~50% is a good place to start), but know that this is your decision to make.
3. Do not chase signals. If you miss the entry on a signal, you are always more than welcome to ask if it’s still OK to get in. However, a good general rule of thumb is it’s OK to enter if price is between 1-5% of the original entry. For example, if we signal entry on an options contract that costs $1.60 ($160), the maximum you should be paying is 5% (or $8) more most likely. If you missed something, don’t worry – patience is your best friend. There will always be more signals – it’s not necessarily the case that there will always be more trading capital. If following a challenge, you will need to decide whether or not you think it is worth entering higher. If it’s lower, by all means shoot!
4. Additional note: If you do not see a strike date next to a signal, it is always going to be the contract that will expire the soonest (usually a weekly or 0 date (same day) expiration if $SPY or $QQQ).
At the end of the day, we can’t predict the future. Know that not every trade is going to be a winning one. We may even have a string of losses, but overall we’ve been right far more than wrong. Stick with the plan, and let’s all grow our accounts together!