Today's Quote: “In order to live free and happily you must sacrifice boredom. It is not always an easy sacrifice.” Richard Bach.

In several other articles we have talked about the benefits of initially using a small risk amount and slowly increasing that amount in a very precise planned manner until you arrive at the maximum risk amount you want to trade with. That is a long discussion, and has been outlined several times. If you are a VCM Trader, you are already familiar with this process because it is part of your ‘Trader Advancement Program’ (http://www.vcmtrading.com/advancement.php). Today we want to discuss a question that comes up with traders who are past that point, and have been trading their risk amount, and now want to increase that amount because they are doing well.

Most traders in this scenario move up the risk amount after a series of successful trades or successful days or weeks. It feels right, because they are trading well and have confidence. This is generally a mistake. Here are a few reasons why.

First, an amazing occurrence seems to happen very consistently. Most people will find that their BEST trading day ever, was followed very shortly by their WORSE trading day ever. How about you? What is the reason? Some of the reasons are, overconfidence, abandoning the plan that got you there, and increasing risk amounts without more information.

The truth is that many will do well using a certain strategy, but then the market changes. This change may affect the strategy they are playing, and frustration sets in. It takes seasoning through a variety of market conditions and a trading plan that has survived a variety of market conditions before you start raising risk amounts.

One final reason: If you track the progress of your account, you may find that you have strong ‘rallies’ and some ‘pullbacks’, just like the chart of any stock. With that being said, you want to make sure that the ‘pullback’ is a buyable one. You also want to make sure you are not ‘buying’ a climactic sell set up in your account.

Once you have gone through a series of rallies and pullbacks in your account, and live through a variety of market conditions, and you find you are making ‘higher highs’ and ‘higher lows’, then look to slowly raise those limits.