Well I have made my fair share of trading mistakes and then some. For some reason it has been easy for me to review my trading and determine all the mistakes I have been making. What has been more difficult for me was to STOP making the same mistakes over and over again. So you could say I needed to "learn from my mistakes" and not just identify them.
I feel that just reducing my mistakes will make a big increase in my profitability. You can tell that from my first few Trade Review posting to this blog. To help me reinforce what I'm working on and why I'm writing this Blog, I tried to collect my top 10 area to improve on. I hope this also helps others see and correct mistakes they are making.
- Trade Selection - Be careful on trade selection after passing on a trade that ends up working. Stick with entry standards and rules and wait for the next signal. Don’t let emotions trick you into forcing a trade because you fear you are missing out.
- Stop Management - Only place your stops at levels where you are willing to exit the trade. Give some room to the trades you think can continue to profit. Don’t place stops at arbitrary profit objectives, they are more apt to get hit sitting there.
- Advanced Tactics - Don’t get fancy and kill winning trades by reversing a position or adding to a trade. Never add to a losing trade, and only scale into winning positions as an advanced tactic.
- Let the trade work – Give new trades taken at valid entry signals some time to become profitable. Expect the price action to test the entry price, so don’t panic and close the trade too soon near break even when the market tries to squeeze out other stops.
- Follow the Trend - Focus on the trend trade entry signals. Only take counter trend trades when there are monies in the bank that you are willing to risk. If having a bad day, or just seem to be out of synch with the market action, only take clear signals in the direction of the trend.
- Continue to Manage Trades - Manage trades, take profits, or press stops to protect partial profits when counter trend trade signals dictate it. Remember, reversing a position at a counter trend trade signal is an advanced tactic. Be profitable before getting into more advanced strategies.
- Pull the trigger, but don’t jump the gun - Have some patience; often the best entries come a minute of two after the signal is generated. Plan a good entry price and pull the trigger fast when your entry is offered.
- Maintain Focus - Keep focused on the trade signals and the current trend direction. Constantly evaluate sentiment and market measures to have your feel for what price action is likely to do next. Minimize distractions for the time period you plan to trade.
- Treat each Trade Uniquely - Manage each trade unique to it self and the current price action. Don’t let P&L decisions or prior loses change your trading plan.
- Hope is not a Trading Discipline - Don’t get locked into a single course of action and "Hope" the trend will always continue. Be it long or short. Most days have tradable corrections. Watch and be ready for the short term trend changes. Trade what you “see” in the charts and not what you “Hope” will happen.
Trade Wise, Trade Well
John
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