Rick posted this comment:
“I would love to hear more of your mistakes. I am sure it would be something everyone could learn from. As for me, why is it when I print out a chart of a day I can see all the spots where I should have gone long or short but when I am in the middle of it all, I miss so many of those opportunities? It is supremely frustrating. Looking forward to the day when my entries look like yours.”
I got a chuckle out of this comment, because if were to enumerate all the boneheaded trades I have made over the years, it would be a 50 page post. I suffer from all the maladies another other trader suffers through. My biggest weakness is to be happy with a three point gain in a trade, especially if I am bracket trading with 12 tick stops. I have also moved stops to accommodate a losing trade if I erroneously feel I am in a good trade and the market isn’t cooperating.
In general, I make the same mistakes most traders make while trading, and that is getting my emotions/ego involved in a trade, which is the recipe for a disaster. I have traded long enough, and professionally, so I don’t make these mistakes as often as I once did, but there will be a real stupid trade on my part at least once a month, and I will try to highlight those trades in the future.
I have always contended we should trade without our emotions and just trade the chart that is in front of use, though I do suggest you be mindful of the economic announcements that are scheduled for that particular day. The problem is, as a human being, it is virtually impossible to check your emotions at the door. Emotions are an integral part of our personalities and we ARE NOT robots, no matter how hard we trade.
As I have often discussed, any trade is has a binary outcome, though the probability of a trade becoming a highly successful trade involves a very complex algorithm, as each step upward (say, in a long trade) has an independent probability than the previous bar. But a convenient way to look at trades is basically a probability play, and I have spent long hours studying and calculating the probability of certain set-ups. Still, if a trade carries a 70% chance of winning, you must not forget that it also has a 30% component of losing. So the probability angle simply becomes an educated and well studied decision to trade when the odds are in your favor, and avoid trades when they are not in your favor. Still, even with that mindset, some of the best setups are going to produce unsatisfactory results. That’s just part of the game. Factor in a few bone-headed trades and you have the makings of an unsuccessful day of trading. I’ve don’t it, believe me.
My thought process when I see a good trade is to find reasons not to take the trade, or at least weight the positive possibilities of the trade against negative possibilities of the trade. In essence, I go through a process of an internal argument against the trade until I reach a conclusion. This facilitates the account busting practice of over trading. If you are trading more than 5-8 trades a day, you may consider whether or not you are overtrading your account. On the other hand, some days present great opportunities and you may have the odd day when you trade a few more times than usual.
In summation, emotions/ego involvement are my Achilles heel, as is true with most trade. I can be stubborn. But remember, if you are in a bad trade and things are definitely not conducive for a good trade. Exit the trade, and find another good set up.
© 2009, trader7757. All rights reserved.
