January 22nd, 2018 | 4 minute read (Repost from We The Market)
This last week was not a favorable week by any means. As my reading continues to educate me I cannot learn it all at once. This week there was an emphasis in setting one goal. My one main goal was to minimize losses. If only that was my single issue to work on. I have many trading faults in my new career that I am correcting.
Yes, I did minimize my losses but that did not mask I am over trading and forcing trades. When you have 10 trades go south that ads up to a big loss. First, 10 trades is too many. Second, inside each stock trade there are multiple tickets. I must now set more rules on myself when I am not in the trading zone. I believe what is happening is that when I lose my first stock pick and so desperately, with anxiety, want to make that loss up I jump in another unplanned trade. An impulse trade. My judgement is impaired when emotions jump into the game. I see that entry went negative and I immediately jump out. I rinse and repeat the atrocity. Later, I gasp and say, how did this large loss happen?
How stubborn am I? I wish I can say this was a first and last time I had multiple losses add up to a large loss. As I write this piece I can tell you I really want to curb this behavior. I am glad I am expressing myself here and hope if you are making this mistake you can correct this issue as well. There is no secret that many elite traders tell you to take a break. Also, set limits for the day. Minimize losses takes on new meaning. I have proven this week to reduce a single stock loss when it happens. Now I am adding more on to the meaning of minimize losses. I will quit at a predetermined level. Ideally, wearing rose colored glasses, you won’t have losses but the reality is you will. It comes with the territory. When losses do happen, the goal is to minimize both a single stock entry and your entire day losses.
Snap out of that trance and end your day at a set loss target which has been planned if you are not trading in the zone. You will thank yourself tomorrow.
Finally, I want to be very clear about my trading. I trade for profit. Don’t mistake this post for my style of trading which is to go into the day with only a minimize loss attitude. Profit goal attitude first and IF I am not in sync with the market and I take some losses, then minimize loss rules will be followed.