Trading seems to be characterised by expensively relearning things you thought you knew already (at least for us mortals). On a more serious note it has a lot to do with not making mistakes ie winning by not losing - the old point about winners winning by not making errors - make money by not losing money. Oh and thanks Scientist, highlighted a couple for today - not as if the existance of these errors was an eye opener to me! *************Philosophical/BS section************* Put another way, it's about survival [probably] like being a fighter pilot, one slip up can be all it takes. In peacetime I understand pilots practice endlessly, casualty rates in war are [apparently] highest in the new guys on the first time out who don't survive long enough to learn at a gut level what they need to do to survive. Knowing what to do from being told what to do and doing it are not the same thing. **********************************************
Hi Scientist, Could you explain some of the errors you listed in your log in Trade Management section. For instance, "Let a winning trade turn into a loser"--you planned a 2-point stop on the mini with a 2-3 point target and it went 1 point in your favor, you stuck to your plan and didn't take profit, but eventually got stopped out for a loss. Why would this be an error? I would think as long as you trade your plan, it is a good trade regardless of trade outcome. The fact is that we don't how which way or how far the market will go, so we wouldn't want to second guess ourselves once the trade is put on. For the same reason, I wonder why you would list as an error "Stopped out, to watch market trade back in favor", which somehow contradicts "Didn't predefine risk before entry." Perhaps your list reflects your style of intraday trading? This is not meant to criticise the list, which is a great way of dealing with trading demons. It is just the errors listed echoes the thought "fluctuations" I personally experience every trading day. I don't think we should let in those thought fluctuations when reviewing trades. To contribute my fair share of errors to your list, I would say costly execution errors: --selling the wrong options strike or month, often in the heat of trading, thinking I would miss a chance if I don't act soon; --in mini's trading, trying hard to enter at bid/ask, thus missing the big move; --not believing in what is happening (anti-flow thinking). Enjoyed reading your other posts on trading. Cheers, tc
Hi taigong, You are excactly right, it reflects my particular trading style(s), specifically scalping. With a plan that requires to sit in until you're stopped out, the mistake "never let a winner turn into a loser" obviously doesn't apply. But if you're a scalper, this is an extremely important rule. Why? Because a scalper tries to take momentum, he wants to see things go right his way. If you trade's already been in the green, then goes back into red, then you've most likely missed your exit, and the market is already going the other way. You should already be out. Anyway - the list has mixed error types for mixed types of trading I do - That's why I said you need to do your own list. This one will only be confusing to you, unless you trade a mix of parameterized systems and pure scalping at the same time, like I do. As above - not fluctuations, but variety. It is a general list. Some good points, although I think "anti-flow thinking" is already covered. "Trying for ticks" is also a good point, but only if you're aggressive. I almost never enter at market, I don't like giving up the spread, so it's not on my list, but it's a good point. As for selling the wrong options... Well man, mistakes like that are pretty dumb, aren't they? You clearly haven't thought about exactly what you're doing, if this happens to you... Particularly with options! Ouch! Enjoy! S
in my experience, i think these errors are made because (as you sau) you dont wanna miss the move. this could either be greed based or fear based. either way its a sign to me of overtrading. i try hard NOT to enter the market most of the time now. ive learnt that unless ive planned the trade through, i know all the points at which i want to enter and exit and the conditions i want to enter and exit. i want it my way or i let the trade pass. for me, learning not to worry about missed opportunities is part of the business. ive learnt to chill out a bit - the markets will be open tomorrow and there will always be opportunities then. Today the market will present some opportunities to make money. it will also present many more opportunities to lose money.
Thanks, Scientist, for the explanation. The reason that I asked for your explanation is that I have these conflicting thoughts myself. I tend to trade intraday swings, but, as you know, the line between intraday swing trading and scalping is very thin. Often I start out with a swing plan but end up with scalping gain/loss. Sometimes the quick exit ruins the trade, and sometimes saves the trade, but when I catch a wave I ride for what it is worth and that is what counts. So as you stated in your first post in this thread, an active trader commits errors all the time (I do myself), since (s)he is dealing with inperfect information and has to act very quickly at times. There is really no way around it. What's important for a trader, imv, is to cut down, to borrow a tennis term, "unforced errors." Cheers, tc
FredBloggs, What you said rings so true. It is hard NOT to enter a trade unless it is on my terms. Thanks for your comment. Cheers, tc tc
real simply, it always happens to me when I get emotional (ie. greedy, worried). Whenever I just act like a robot and get consistant, I do pretty good. And my wife tells me I need to be more sensative. Please.
With 48% of traders making an average of one mistake per day and most daytrading strategies only having very small edges. How the heck are you all making any money daytrading