I have a rule of working in only 1 lot for stock futures. But recently I have traded with 3 lots.
That was a big mistake. I reached my max drawdown in an instant, which I have not reached in the last 3 months.
Why I did this blunder?
It was a revenge trade. I was in big profit around 6-7% which on the next day moved up to 10%.
Due to greed, I did not cut the trade, and my profit was reduced to 2% and I booked it.
That was the trigger point for me to take revenge trade and entered with 3 lots. (putting all the eggs in one basket). and the very next day I reached my max drawdown.
Learnings:
- If profit is somewhat high or reached your weekly/monthly target, then book it or book it partially.
- If the above scenario happens again then take a break and come back with a fresh mind the next day.
- Do not put all eggs in one basket.
What I have done right?
- Exited once I reached my max drawdown. (should have exited earlier but the thing happens, the main point is what you learned from them).