Quote from ken__0:
Sounds like your striving for perfection.. which to me is pointless
perfection is ugly ...... nothing is perfect...
just do it ...
we can always remain confident as long as we live life with no Regret's.
Happy Trading NoDoji
I disagree. Confidence is important, but striving for perfection in following trading rules is crucial. Confidence without strict adherence to rules and trading plans can wipe you out. Without perfection in following my rules, I'll always be at risk for losing more than I gain, and I'll continue to leave large profits behind.
I do agree that striving for perfection in the outcome of trades is pointless (and in fact very dangerous). Some trades will gain, some will lose. As long as I follow my plan for the trade and my rules for trading, I should be a net winner.
But I can't make a living if I follow my rules for 3 days, then wipe out the gains in one day by violating them. I can't make a living if I take five $30 losses in a row, catch a winner and close it at +$150 because, whew!, I'm back to even, thank God!, and watch it move $250 more in my favor without me.
Last year my biggest "loss" was actually a massive winner cut short because I changed a trading plan without a technical reason for doing so. My husband put on a swing short position for me in his IB account (my Etrade account had no shares available to borrow on this particular equity). I told him to place a pretty wide stop above 52-week resistance (it was a thinly traded stock that often moved 1.00 in a few minutes), and that I was targeting a price zone of 50% retracement of the move it had made from the last low to this recent high. Price moved against me the next day, and my husband, who liked the daily chart setup of this trade) doubled the position when it did, adding an equal size for himself, since he was comfortable with the stop price.
We now had a significant position size that, based on stop and initial target zone, provided better than 2:1 reward:risk ratio. The following day price moved a bit higher and came within .50 cents of the stop. Even though I had chosen that stop, seeing the drawdown that the double size position showed when that happened changed my perception of the trade. Prior to this I thought my initial target was extremely conservative and that in fact we'd get a much better move in our favor when that zone was reached.
Now, I suddenly doubted my plan and didn't want to lose that much if the stop was hit. Nothing about the trade had changed. Only my perception had changed.
The next day price pulled back significantly and our position was profitable. It moved within view of the initial target zone, but then over the next 2 days it moved slightly into the red again and consolidated in a fairly narrow range. The day after that, price moved a few ticks higher than the previous day's high off the open, but quickly started falling.
A failed breakout, leaving a lower high. This had gone from being a counter-trend pullback trade to exhibiting a confirmed reversal signal.
But seeing that large drawdown earlier blinded me to the new price action picture! I just wanted to take some profit and run before it "turned" on me again.
As soon as the trade was over $1500 profitable and price started to tick up a bit, I told my husband to take the profits and we could always short it again on this bounce. We closed this trade 2.00 from my initial target zone, which was a conservative enough target for a counter-trend pullback, but now we had a confirmed reversal signal and that initial target should've been lowered, certainly not raised.
Within minutes of closing the trade, price broke down hard on heavy selling volume, not finding support until it had fallen well past my initial target zone. Just 2 minutes of patience and adherence to the plan and we would've pocketed an additional $10-$12K depending on how much slippage we got from the trailing stop that would've been in place once the target zone was reached.
I wrote in my journal that day that it was my second worst day ever as a trader, psychologically. I was holding a large losing swing position at the time and this winning trade would've covered it 3 times over.
