If you are trading without a stop, you are playing with fire. Not because the market can move 100 ticks in a second — though it could. But because then, you haven't clearly defined your risk. And without doing that, you are likely to let your market bias keep you in a trade longer than you should be... increasing losses.

That is the kiss of death. 

Just because you should have a stop doesn't mean that all stops are created equal. There are three main ways to set a stop: (1) financial — based on the amount of money that  you are willing to lose; (2) static — your stops are the same for every trade; and (3) technical — you use market information to tell you when your thesis is proven wrong. Here are the pros and cons to each. 

With volatile markets, traders are able to take advantage of some big moves, without having to take on more risk. In this latest episode of The Trade, Performance Coach Dan Hodgman talks about a trade by Alexander K. (Latvia) put on. This trade is unique in a couple of ways.

First, the fact that Alexander had the patience to ride this for $5,000 in profits is unusual. That tells you something about the psychology of choosing a target and then sticking with it when the trade moves in your direction. 

Second, Alexander sold Crude Oil at the lows of the day. Oftentimes, inexperienced traders will look to buy the market at the lows, letting it make lower and lower lows and then puke out the position. Instead, Alexander did the opposite. He didn't fight the market and sold at the lows of the day, capturing a $1 move. By trading 5 contracts, that equated to $5,000 in profits.  

But the best part of Alexander's trading was that he did this all with a personal daily loss limit of $400. Think about that risk / reward ratio: he has the opportunity to make more than $5,000 in a day without worrying about losing more than $400. It will take him 12 max losing days to give back that $5,000 in profits to the market. Those are the types of risk / reward setups that enable long-term success. 

 Here's how Coach Dan breaks down Alexander's trade.

Developing a trading strategy is about finding that right mix of factors. You want to pay attention to the things that might indicate prices are about to change, while ignoring all the noise that comes from having so much information at your fingertips. 

Anna Coulling, a trader that has been trading for more than 20 years, boils down her strategy to two things: volume and price. 

In this interview, Anna gives insight into how she analyzes volume and price and why those are the main factors that she uses to trade forex and futures. 

Study charts. Stalk market. Execute trade.

This is the habit for many traders. But it’s missing something. And that something could make a big difference between progress and stagnation — and ultimately between being a profitable trader and not.

What’s that habit? Writing down your trades. Here’s how to incorporate it into your trading and take your mechanics and psychology to the next level.

Markets are up and roaring for another week — with everyone's ears perked up listening for how the trade war / not trade war situation plays out between the United States and China. 

But while you can't control what President Donald Trump or President Xi Jinping do, you can control your entries, stops and exits. Here are some of our favorite quotes to get you motivated this week.

Just because markets are closed doesn't mean that you can't make progress in your trading. And while you should absolutely take some time this weekend to unwind and get away from markets, you should also take time to work on those things you can — all so that you will be a better trader on Monday. 

Here are three resources that you can go through in less than an hour. If you do that, we promise you'll be in a better place when markets reopen. 

Enjoy. 

If you want to watch what happens when you don't control your trading losses, pay attention to what's going on at Pershing Square Capital. Pershing Square — led by billionaire hedge fund manager Bill Ackman — managed nearly $20 billion of outside capital three years ago. 

But Ackman's fortunes have changed since Forbes famously compared him to Warren Buffett on a 2015 cover. According to the Wall Street Journal yesterday (subscription), "most" of Ackman's investors are asking for their money back. 

What changed? Ackman failed to follow these two trading rules — and it may sink his fund. Here's what you can learn from a billionaire's huge mistakes.

Let’s assume you’ve made a number of good decisions as a trader. You’ve selected markets and loss limits that fit your style. You’ve studied the charts and developed a strategy that gives you an edge. You’ve even created a trading plan that supports your long-term goals.

But despite your best efforts, you’ve failed to realize a profit.

Here’s the thing about trading: that's not unusual. Part of your strategy is unique to you, like how you trade the market you trade. Other parts are behavioral aspects that reinforce your approach. Here are three differences that help make traders profitable.

In the latest episode of The Trade, Performance Coach Dan Hodgman hones in on a subject that a lot of traders don't talk much about: taking losses. Anyone who has been trading for a while knows that some of the best trades they make are losses. It can be painful, but it's a fact of life.  Even the best traders are wrong at least three or four times out of 10. 

But even though this trade resulted in a loss, the funded trader that made it chose a valid entry, a valid target and a valid stop point. That means that there's a lot you can learn from it.

If you've ever had trouble taking a loss, you have to watch this. Here is Coach Dan dissecting a losing trade. 

"The most important investment you can make is in yourself." — Warren Buffett

It's another weekend — and after the week we had in markets, you deserve a breather. But don't forget that you can beat out the competition if you make improvements while everyone else is off. 

Included in this week's curriculum: data on TopstepTrader's profitable and unprofitable traders (and what that says about how you can win); an interview with a 30-year trading legend on properly sizing positions so you don't get killed in volatility; and reminders from NinjaTrader's blog about how to trade during highly volatile times.

So here are three resources that will help your trading improve by Monday... all in less than an hour! 

Enjoy.