Using Losing Trades as an Indicator

By his own admission he's a novice


He stick with this - they'll come a time when he thinks to himself - I got this / I know what I'm doing...

You and I both know how that gonna go


Why I said always have a novice's mind set (assume you don't know anything)

I try to do no harm - first and foremost

RN
 
We have to see losing trades as failures, errors, mistakes, carelessness. This is primary school thinking.

As long as you follow a consistently profitable strategy, there are no mistakes in what you do.

We only learn as much from losers as we do from winners. But also recognise that we must learn from the non-trades / the cancelled entry orders / the slightly less than perfect TA that means we never put an order on etc.
 
tomorton said:
We have to see losing trades as failures, errors, mistakes, carelessness. This is primary school thinking.
More...
If you follow your strategy, take your losses as planned, a losing trade is a good trade with a bad outcome.
You can't win them all.
It's quite possible to lose more than 50% of your trades and still make money.
 
Redneck said:
First - if you reading this thinking all losses can be eliminated - throw that thinking in the trash

What I'm gonna propose is - self induced losses can be eliminated


Way I'm gonna T this up will include several "If yes - then"..., or..., "If no - then)

Gonna dig in one or two tiers - then leave the rest up to the reader to do the work


Schizo - off the top of my head - one can define each type of loss - track them over time - then enter that data in excel and plot (graph or chart) to see one's improvement over time..., or where attention needs to be focused


SunTrader - Good thinking - I actually review my trades real time throughout each session - and adjust fire as required

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This works on one loss ...,or all of em..., - you can track real time then adjust fire..., or analyze at the end of a session - downside to end of session - you have to go back in time and re-create the scenario / your frame of mind

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I have a loss

Was the trade in the direction of price's current movement

Yes..., then

did thru the normal breathing of PA - I get jittery and exit early

did my stop loss get taken out - then price moved off in the intended direction

(is my stop loss set far enough away to allow for nominal breathing (ATR set to 1 - is a good tool for identifying this / and real time changes in current volatility..., or simply reading the bars)

did price go in my direction, then come back and stop me out


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Was the trade in the direction of price's current movement


No..., then


was I in sync with price

were my charts not marked up correctly to identify the current movement - possibly were they mucked up with so many lines and such it was confusing me

am I fighting what I'm seeing / having a bad day / pissed off / whatever


=====================

Did price change direction just after I entered


Yes..., then

am I studying what that looks like / learning to contextualize it - so I can possibly recognize when its developing the next time



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There numerous ways one can take this..., and conduct the appropriate root cause analysis

While knowing - some losses are simply part of this business


Being honest with yourself while conducting analysis will go along way in eliminating the self induced BS


same for wining trades.., and over trading


results are a really good indicator - how one is performing


Food for thought

RN
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Very thoughtful post.

Thank you.
 
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