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Coach's Playbook Posted by Team Topstep April 3, 2022

Trading Is Not All or Nothing

Trading Is Not All or Nothing

Trading is hard, but it’s NOT an all-or-nothing game. As difficult as it is to find success as a trader, the rules are pretty simple; make good trades and protect your capital so you’re able to trade again tomorrow. In this episode of the Coach’s Playbook, the Topstep coaches are talking about risk management, money management, and trade management, to help you avoid the dreaded blowout trade.

Risk Management

Would you ever risk more than you have the potential to gain on a trade? Probably not, right? Then why do so many traders lose their accounts due to one or two massive losing trades? It’s likely because they broke their own rules for managing risk and let their emotions take over. 

Every trade you put on should have a pre-determined minimum reward-to-risk ratio. And, after you have entered a trade, your risk parameters should never be widened. We’re not saying it’s a bad thing to micro-manage a trade, but if you plan your exit strategy accordingly, then there should be no reason to move a stop anyway.

Trade Management

It’s important to give each trade you make your full attention. When you put the time into researching high probability trade setups that are aligned with your strategy, then it’s only fair, to yourself, to continue following the rules you have in place and see each trade through to the end.

Trade management might not sound like a difficult process, but it does involve more than having an entry and exit strategy. Managing emotions, such as fear, anxiety, and greed, are also crucial components that can have a serious impact on your bottom line.

Money Management

How much are you willing to risk on a single trade? Is it a dollar amount or a percentage of your account value? Based on your answers, do you have enough in your account to sustain you through a minor losing streak without blowing out your account?

Again, as important as it is to make good trades, your number two job, as a trader, is to preserve capital. If you’re facing the fear of getting knocked out with every trade, then it might be a good time to sit down and re-evaluate your business plan. After all, trading is a business, so it should be treated like a business.