Play ONE contract only !!!

I have seen many novice traders lose all their capital, irregardless whether their capital is US$5,000, US$10,000, US$50,000 and even US$100,000. Most lose them within a year of trading. One of the main reason why they lose capital so fast is because they over-trade or others call it lack of money management. Basically, they trade too many contracts in any one trade.

To all novice traders, my advice to them:
PLAY ONE CONTRACT PER TRADE at any one time.

The rationale is very simple. If you are a novice trader, the tendency for you to play a good trade and make money is less than you playing a bad trade and/or lose money. If you play just one contract and lose $50 per contract, then you lose only US$50. If they you play 10 contracts, the loss is multiplied by 10, i.e. US$500. Some would argue, "Yes, but if I make, I would make 10 times i.e. US$500". Yes, that is true, but like I said, tendency is that you make more bad trades and good trades in the novice stage.

So in the novice stage, my recommendation is always, play one contract at a time. When you have gain confidence (which needs to be built up) and play more good trades than bad, then increase the contract size incrementally. e.g. 1 additional contract at a time.

You play small, win small and lose small.

Following this simple rule requires discipline and patience. Both of these assets are important for traders.

- PersianCat (Millionaire-in-progress)