And a different perspective on why traders smoke their accounts

Explanation of blowing out accounts relating to unforced error count, excerpt from yesterday's live trading session.

Perhaps more of a "slow-burn", another account killer is over-trading. We can eradicate this money leach using the following hack. 

Question:

How many evidence points do you combine when taking a trade ("I think it will go up" is not evidence, that's an opinion)?

What would your trading look like if a minimum of five evidence points were required?

It will undoubtedly curtail the number of trades permitted to take. You'll also find this approach restricts you to higher quality trades.

Here's an example of what I mean using a recent short trade

1. "hole" in intraday value likely to revert

2. multiple failures just below the 1st deviation "session" VWAP (current theme at play)

3. the market moved to an intraday drop in acceptance where natural reversion (in the short term) is likely

4. Currently trading below a significant transition in market agreement anchoring the market to the downside

5. market maker ramps up the price on no liquidity, and buyers who chase get filled near the first deviation, so odds favour forced to exit at lower prices

There are secondary benefits at play here also.

Multiple evidence points let me see the trade earlier than competitors. Early to act equals tighter risk and more significant profit potential.

I've created multiple failure points inadvertently, alerting me to exit the trade early, often favouring prices.

Managing open positions triggers additional evidence points to avoid exiting early and staying too long.

The example above was a short term scalp type trade. Significant plays incorporate multiple evidence points to formulate an uncrowded trade idea while opening a position requires multiple evidence points to align the entry with the market's movements.

Trading from a hypothesis based on multiple evidence inputs and then only entering in real-time with a minimum of five evidence points will reduce trading activity even further. Skilled hypothesis development also captures 10-baggers.