Remember to always action trades with orders to open and never directly into the market.
Whether I am taking a profit, exiting for a loss or caught in a range bound market. There are often two exits that can be simultaneously be placed. One at the top but within the recent range and one at the bottom just outside of the range.
Also-
Gambling studies have shown that the shorter the time between initiation of a gamble and the subsequent outcome being realised, the greater the emotion and the more the addictive qualities of the gamble.
So a scratch card will be more addictive than a weekly lottery ticket and a weekly lottery will be more addictive than a premium bond and casino and slots being very emotionally charged and addictive.
This helps to stay relaxed, steer away from impulsive trading and to get better prices.
Whether I am taking a profit, exiting for a loss or caught in a range bound market. There are often two exits that can be simultaneously be placed. One at the top but within the recent range and one at the bottom just outside of the range.
Also-
Gambling studies have shown that the shorter the time between initiation of a gamble and the subsequent outcome being realised, the greater the emotion and the more the addictive qualities of the gamble.
So a scratch card will be more addictive than a weekly lottery ticket and a weekly lottery will be more addictive than a premium bond and casino and slots being very emotionally charged and addictive.
This helps to stay relaxed, steer away from impulsive trading and to get better prices.
My defence has been pretty shoddy recently. This is because I have been in a hurry to hit my target, so I have more positions open than usual. So to reduce account exposure I have been opening single trades without the break even part. Probably not a good idea.
I'm sure your observation's correct and it will be interesting to hear how your response to this works out.
I have been guilty of over exposure to the most popular markets.
Currencies, commodities and so forth. This has lead to unforeseen correlation.
Even though I have felt uncorrelated, this has been a false sense of security, as all the main
popular markets seem to have a solid macro correlation. As I have found to
my detriment on a couple of market reactions and turns.
I think I have been guilty of this due to an availability bias.
Since thinking about this I have changed my trading to incorporate a greater diversity by trading more
unusual stocks around the world as well. From the more obscure stock markets paying particular attention to trending stocks that are bucking the current trend.
So far so good. I will review this in a few months or so.
Currencies, commodities and so forth. This has lead to unforeseen correlation.
Even though I have felt uncorrelated, this has been a false sense of security, as all the main
popular markets seem to have a solid macro correlation. As I have found to
my detriment on a couple of market reactions and turns.
I think I have been guilty of this due to an availability bias.
Since thinking about this I have changed my trading to incorporate a greater diversity by trading more
unusual stocks around the world as well. From the more obscure stock markets paying particular attention to trending stocks that are bucking the current trend.
So far so good. I will review this in a few months or so.
Confession time: Wally brain – Victim of own success.
Story:
Following my rules, my account grew so large, so quickly, and so many times, in such a relatively short period of time.
I thought I was golden, I could do no wrong. I began to believe it was a given I could make money in the markets at will.
So... I began to break my own rules. Entering earlier than I should. Trading bigger than I should. And I got away with it all. This reinforced my confidence which lead me to break even more rules. I felt I could pick trades out of the sky or off the floor. It was so easy.
So when a loss or two came my way, I thought it so easy, I would trade heavier to recoup some of my lost profits (besides, the account was in such a healthy state, how could it hurt?).
So when the next few losses came. I got angry and started to revenge trade. Still ignoring all the rules that made me the money.
Then with the decrease in account size, I thought, what the hell, in for a penny in for a pound. This was made easier because sub-consciously I associated my profits as being the markets money and not mine. (in a sort of easy come, easy go attitude.)
Moral and lessons.
Big wins = euphoria.
Euphoria = an unbalanced mind, Unbalanced minds = trading like *Tw*t.
Trading like a Tw*t = financial loss and a and confidence loss.
Self imposed penalty= If you do this again you are on a month trading ban.
Story:
Following my rules, my account grew so large, so quickly, and so many times, in such a relatively short period of time.
I thought I was golden, I could do no wrong. I began to believe it was a given I could make money in the markets at will.
So... I began to break my own rules. Entering earlier than I should. Trading bigger than I should. And I got away with it all. This reinforced my confidence which lead me to break even more rules. I felt I could pick trades out of the sky or off the floor. It was so easy.
So when a loss or two came my way, I thought it so easy, I would trade heavier to recoup some of my lost profits (besides, the account was in such a healthy state, how could it hurt?).
So when the next few losses came. I got angry and started to revenge trade. Still ignoring all the rules that made me the money.
Then with the decrease in account size, I thought, what the hell, in for a penny in for a pound. This was made easier because sub-consciously I associated my profits as being the markets money and not mine. (in a sort of easy come, easy go attitude.)
Moral and lessons.
Big wins = euphoria.
Euphoria = an unbalanced mind, Unbalanced minds = trading like *Tw*t.
Trading like a Tw*t = financial loss and a and confidence loss.
Self imposed penalty= If you do this again you are on a month trading ban.
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Today's confession is "I opened to many correlated trades in one day (on a news day - PPI bureau of Labour Statistics, lunch time release.)"
Why = Off the back of loads of really good wins, so I thought I was walking on water.
And Greed!
Solution = Never open more than 2 USD correlated trades at the same time.
USD pairs or USD priced Commodities.
And Ease back, especially after a run of big wins. -Pride before a fall and all that.
Punishment = No more new trades for a week.
(No real harm to account done, especially after such a good run.)
Edit: See post 7, then slap yourself around the head.
Why = Off the back of loads of really good wins, so I thought I was walking on water.
And Greed!
Solution = Never open more than 2 USD correlated trades at the same time.
USD pairs or USD priced Commodities.
And Ease back, especially after a run of big wins. -Pride before a fall and all that.
Punishment = No more new trades for a week.
(No real harm to account done, especially after such a good run.)
Edit: See post 7, then slap yourself around the head.
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Another thing I have been guilty of doing recently is buying back into a new trade that stopped me out on the entry stop, so never went into profit. My rational was that the trend was still up, and it's now a better price.
But in reality, entry is no longer my set up (and half way through a candle, so entering in the day) So it is pure and simple Revenge Trading!
But in reality, entry is no longer my set up (and half way through a candle, so entering in the day) So it is pure and simple Revenge Trading!
I use a table with various tick-boxes or score-boxes for price characteristics to define trends. Also helps to assess them against each other. Very simple stuff, e.g. is 50EMA sloping upwards or downwards? etc. etc.
Sometimes what I thought looked like a strong trend on the individual chart turns out to be (technically) not a trend at all as per my criteria, or not a strong trend when compared with others current.
Tomorton, you are dead right here.
I have a tick off check sheet and the first item is
1. You must be at home (not on the mobile) with this check sheet in front of you.
Then I have to check off other items such as the order of ma's, exposure, news, correlated exposure etc, etc.
Because like you say in the heat of the moment the most ridiculous charts can look like good trends.
BUT. The big but is I wrote this about a year ago and I change it sometimes. BUT... it's still on the computer and I have never printed it or used it!!
This changes now. Thanks for your input.
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