Substantial LOSS vs substantial GAIN
Let me be clear. We are in the trading business to make money (and of course for the whole package trading can offer us). You have to love every day since there will be dark times in your trading and see a loss as an opportunity to get better, to improve. We should all have plans when to exit, enter, add size, reduce size and so on. Plan, plan, plan. Should, should, should. But, once in a while there are days when it happens that you do not follow your plan and just act impulsively. It can happened by anxiety, that you have been sitting in front of the monitor the whole trading session nothing is happening and you do not want to miss any move because what would be the outcome of that session? ZERO? Really zero? Well next time you think 0 is bad remember this: “First rule of trading is not to lose money” and take the most out of every trade, any trade: loss or gain.
Well this 0 wasn’t enough for me on the 2nd November 2010 when I shorted GBPUSD at (15:59 GMT+1) 6008 level. It seemed one position wasn’t enough and I added more (remember when I said that I just can’t finish the session with 0?). So I added one and again one more. It happens rarely but it happens. What was the outcome? (-11 – 16 -18pips = -45 … which is for me well above my daily limit of -25pips). When I entered these three positions I was so emotionally attached to it that I couldn’t EXIT on my EXIT level. Why? Well when you so desperately want to trade and opportunities are not coming you just create a trade setup in your head. Of course I had a plan to go SHORT on M pattern at 6008 break but did I see the volume coming in? NO,… Was there reason to add more size? NO,… Did the price reversed in the manner which strongly suggests that my move is over? YES. Did I lose badly because I was not following 4 out of 5rules I set for the trade? YES, YES, YES. This happends time to time and you have to take the most out of it. Sometimes we do things we do not understand and even if you do such a stupid mistake like this you have to focus on another trade. So next time you think 0 is not enough think again because maybe the very next trade would be just the one you made up for yourself. Substantial GAIN
So above I have defined my really bad trading session. Well, -45 pips is not a killer but is far over my daily loss limit which is -25pips. Usually I am trying to target daily +25pips. Which would mean that for the -45loss I would have to trade with my average gain for next two to three sessions to gain back the loss. Well that said, this is just statistics. What is the most important thing after loss like that is a focus and process driven mind. Which means longer visualization techniques after the loosing session, better preparation, high probability setups only etc, etc. You should be picky but no hesitant the next day after you made the loss. So what was the next day (Wednesday) outcome out of both morning and afternoon session? +7pips. Following the plan paid of and +7pips was great for difficulty which the next day provided. Then we had Thursday (QE2 has been announced on Wed evening) so I was planning for some bullish move in EURUSD. Theory was to build up a multiple position once 4149 is broken. The only ENTRY triggers was modest retrace after the important resistance will be hit (IN2 trade – see second image) or high volume candle and close above 4149 (IN3 trade). As planned it happened. Focusing on the plan the first exit for the IN2 position was at 4185level and was exited by TP. Second position was exited manually at the slowdown – here I could hold little longer but it would be foolish to think we can pick TOPS and BOTTOMS. One thing I could do – exit by strong break of 1,42 but that’s well said at the moment but we are trading in the moment and after the war everyone is a general. So overall profit: +41 + 49 + 10 = +100pips profit. Something what totally engulfed 🙂 dark Tuesday. Conclusion
There will be times when we would question our discipline as well as our trading plan. Rather then focusing on the final goal we should focus on the actual process of trading and it’s performance and keep doubts for after-trade analysis. After the session we can clearly extract what went wrong and if our reactions were more then usually emotionally infected. So what is the message?
> focus on the process, not the final figure and take every trade as an opportunity to learn, to get better! < Keep it tight 😉
Leave a Reply