Fed's Two-Day Meeting Begins. NVDA Trade Sets Up

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There were several great traders that used my desk and Bruce Kovner from Caxton was a very smart guy. The thing I liked about him (early on) was that when his people put in orders at the desk, he would always have them ask if the locals were long or short and what the retail accounts were doing.

He also used to talk about the retail accounts and one thing that he said was spot on: “My experience with novice traders is that they trade three to five times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks. The emotional burden of trading is substantial; on any given day, I could lose millions of dollars.”

I hate to admit this, but I am one of those people and the funny thing about it is, if I just do 1 or 2 ES or NQ — or even both at the same time — I'm fine, but once I’m trading 8-10 contracts or more, it becomes too much. A 5% to 10% account swing takes a toll, mentally.

I think the key to this is knowing what you want to risk before you make the trade and there has to be some type of risk/reward ratio in mind. I like 3-to-1 under the right set ups; if I risk 5 points, I want to make 15+ or if I risk 10 points I'm trying to make 30+.

In my case, it’s ideal to always do 2 contracts, so if it does go my way I can get out of one and keep a runner.