Just recently got burned by trading not in my field. Probably a lot of traders can relate to it. When you try out something new, out of your EDGE where you have just a little understanding what you are doing.
I took BA Options puts trade, I had some insights how to trade those but its not my edge, its not been tracked as all the other patterns I have.
First thing, spreads was too big, its volatile as hell.
I couldn’t afford to lose so much again with my small account, it might take another week to recover or not recover at all. Thats the way it is you must pay for your mistakes.
Now I have a new rule, dont trade options until you have enough cushion, bigger account. I would like to learn Options in future, but not now. I need to concentrate on small caps. At first learn the patterns there, get confident, build account and when you are a lot more better, then can start learning something else with the same process. Start small, find patterns, track them, get better, build confidence and only then can start using bigger size. Protect your capital man.
It goes for everything, if you are trading big caps, trying out small caps with the same strategy can be destructive.
Trading and sticking to your patterns takes a lot of discipline. If you don’t know your patterns yet, trade small, don’t try to win big, learn patterns, track them for few months and maybe then you are ready to size in for best ones.