Using Losing Trades as an Indicator
- Thread starter Redneck
- Start date
Small ball all the way!
Obviously.
Redneck... By ATR 1 you basically mean the previous day's range? Which is s very important piece of info for someone to have in their toolbox
If I understand you correctly, then you want do categorize your trades into winning vs losing. I think the challenge with the above categorization is that trading is not just about skill, but rather a combination of skill plus luck, and I think the luck factor needs to be removed if you want to learn from your trades.
As you know, you can take a perfect setup and execute perfectly, yet it takes only one trader with more money than you to change the outcome of that trade (the luck factor). You can also take a FOMO trade, screw up everything you can, yet the trade ends up a winner (the luck factor).
Therefore, I’d suggest that you also classify trades into ‘mistake free trades’ (following your rules) vs ‘trades with mistakes’ (not following your rules).
Then you can start tracking how many ‘Risk-multiples’ are your mistakes costing you, and also tracking (in %) how you’re efficient in in terms of mistake-free trading.
Let’s say your technical edge makes you 10 Risk-Multiples per month, but if you make some mistakes during the month, then instead of 10R, you might end up with only 6R. If you'll focus on improving trading efficiency (which has nothing to do with reading charts) and focusing on trading mistake-free (following your rules), then the increase in returns can be phenomenal.
If you want to improve your TA edge, then I think you should manually scroll through historical charts and capture each of your set-ups and paste it into your set-ups library and annotate each chart with before/after comments (including market conditions). That way you’ll be far more objective than doing it with live trading.
Nevertheless, I want to make it clear that journaling your live trade with all kinds of metrics is very beneficial, regardless of whatever approach you're using, it comes down to individual preferences.
if I were to categorize them it go something like this;
Against trend - I was fighting what I was seeing
Against trend - I was confused with direction of actual move
With trend - I got shaken out due to nerves
With trend - nominal volatility took me out
Traded a turning point
Traded a pullback
Ol lady yelling at me / dog pissed on my leg
Got up late and wasn't prepared / Didn't eat breakfast
Or whatever is applicable to my situation - then track number of occurrences over time - in excel or similar
RN
Last edited:
And / or individual bars - depends on the TF one it trading
Trading is not..., nor ever been - a one size fits all
RN
I categorize each trading day by type and profitability (Green/Red). For each log I tag everything I see in price action (opening, setups, behavior throughout the day, etc...anything I want to track) with screengrabs of the chart including trades taken & economic reports released.
Both winning and losing trades are helpful to track; you can use your database to work at identifying what to look for when a trade worked or didn't work, and build your probabilities from there. People that are 'lucky' are the ones who put in the work.
Both winning and losing trades are helpful to track; you can use your database to work at identifying what to look for when a trade worked or didn't work, and build your probabilities from there. People that are 'lucky' are the ones who put in the work.
%%I use commissions paid as an indicator
The best months I have had so far were usually those with the least amount of commissions paid to the broker. Overtrading is costly
SAME here.
Some execeptions include\
when SCHW did no commissions. [ But bid \ask is $till an expence, so oVertrading is costly.......................................................................................]