Trading Psychology

Every market position is important in the short-term. If it’s a good trade long-term but not short-term, get out until short-term is long-term.

  • Without margin money, there is no such thing as L-T trade.
  • Every trade has lost money at some point in the trade (but not too much). Expect some losses, but get out if they exceed your expectations.
  • Most big loser trades are winners at some point. Usually they have almost as many up days as down days, but down days have two to three times the move of up days. That’s the sign of a losing trade. If you are in a situation like this for one week, get out. (Hint: $500 loss or more)
  • If you get in a trade and can’t sleep or have unusual dreams, get out.
  • Stay in positions as though you are protecting equity. You can’t get out, or you’ll lose equity. Ask yourself, “If I were protecting equity for today and tomorrow, what side of the market would I be on?” Then get on that side.
  • Never risk more than 5% of your equity on one trade. Never jeopardize your farming operation for a trade. NEVER. The market is there every day.
  • Treat every trade as both a potential loser and a potential winner. Know how to tell the difference when you’re in it. (HINT: Winners make more money every week. Losers lose more every week.)
  • If you’re losing money consistently for six months, stop trading. Try to find out why you lose. Then try something different. (Pick up a technical analysis or trading psychology book.)
  • Think positive. Have confidence in yourself. If you don’t feel good about what you’re doing, change it immediately.
  • Never make a trade on a market that just completed a major move if the only reason for making the trade is that you just saw a major move and missed it. (Warning—those most susceptible to this are the ones who did expect the move but made the trade earlier.)
  • Anybody can catch a “big” winner on occasion. However, if you don’t have a strategy to reproduce your results, you will give all the winnings back to the marketplace.

NOTE: The above are opinions of Progressive Ag and are not supported by specific research. The intent is to help you market cash grain more effectively, as the rules are intended for cash sales decisions. The underlying basis is not scientific law. As always, future trading implies risk, and there are no guarantees that using these rules will produce profits.