As we come to the end of 2014, I was thinking of what the best trading tip was that I could leave off this year

with.

Sure, there are tips such as “watch your risk”, “understand psychology”, and the many other

cookie cutter type of statements.

Yes, cookie cutter however they are

still very important tips.

Then there was a great lesson today in the stock market ticker: NDRM

NDRM is a company called NeuroDerm

and news came out that recent Parkinson treatment results were

pretty good.

Analysts upgrade the stock to a share price of $17. Great news and the

upgrade cause a perfect storm that by EOD, the stock price soared almost

195% and volume was incredibly high at over 40M shares

(miles above the average for this stock).

What you don’t see on this next chart is any reason to sell ( I couldn’t get

borrows on it anyhow ) but there are those that did short after the stock

punched up “too far, too fast”.

Then they got squeezed.

And lost a ton of money.

Those that added to their shorts as in losing positions (which you know happened), lost more than a ton.

You can see where some no doubt tried to short like staying short on the early breakdown, fading a breakout, and shorting after what MAY be seen

as a blow off with volume. Toss in early trapped shorts and this day dealt

a tough lesson to many traders.

It’s the whole “trade the trend, trade what you see, not what you think”

mantra. Instruments can go further than you ever think they will.

Those are obvious tips and I agree they can be hard to follow at times. So that

is not the best tip I could leave you.

Withdraw.

The best trading tip I could give you is to take out some of your winnings so it’s not

just a bright light on your screen.

Wire money out of your trading account and put it in your bank account.

Withdraw the wired amount out into cash.

It’s real money. Hold it in your hand.

The first time I took money out it was $11000. Not a lot of money by some standards but holding the actual cash makes you realize the power of what

you are learning.

The power of what you are doing as you sit in front of

your computer screen.

It’s that feeling of real money that will have you obeying your stop because that bright light loss is real money.

It’s the same feeling which will have you taking your profits at your defined targets in line with your trading plan.

You won’t be tempted to “squeeze a

little more” from the trade.

Think of the stock chart above. Many that added to their losing position could do so because they had the

funds available.

Taking regular trading profits gives you a smaller trading account which forces

you to stay inside sane dollar parameters.

From what I saw, traders lost 6 figures as this stock pushed higher.

You can certainly give yourself a raise by leaving enough extra in your

account that allows you to trade X amount more shares/contracts and

that is probably a good idea for some.

It’s when you leave too much in your account that will fund you when you

make trading errors….such as shorting a market when the chart gives no

indication that is the right play.

Now of course you never want to rely on your trading account balance to keep you attached to the trade plan

and all the right trading habits. That is not what this trading tip is for.

This tip is all about taking the money from the digital world and having the tactile experience of holding wads of

money in your hands. It’s easy in today’s world to pull out your credit or

interact card and spend money.

Money takes on a whole different meaning when you actually open your wallet and pay with cash. I know for

my wife and I, we are a lot more tuned into our spending habits since

preferring cash over plastic.

Once you do this, you will not look at your P/L the same ever again.

You may become a better trader in

2015 because of this simple exercise.