Quote from xdiesel123x:
biggest mistakes:
1) lack of patience
2) chasing
3) on big losing days- I notice that I try to predict instead of trade and think I know where the market is going. Looking back I should have known why I was wrong during the times I was wrong.
4) taking losses to quickly-product of chasing trades
any advice thoughts. I do not feel like I should do less than I am doing. I feel I should do more. Tell me what you do or dont do...thanks
Lack of patience is an account-killer. It leads you to try and make something happen that's just not ready to happen. You'll get into trades too soon, use stops that are too wide, then get nervous and exit too soon leaving profits on the table, and end up generally losing money. You say you review all your trades, so you should easily be able to define your profitable setups. Wait for these setups and trade them. If an entire day goes by and you have no trades, that's fine. All it takes is one solid trade to make a good week's pay.
You are doing well to prepare yourself, but because you are diluting your attention, you end up making common mistakes, such as chasing entries. You watch one chart, the glance at another and see a move happening without you. You believe you can somehow "get back" what you missed and that causes you to make silly trades.
You feel you should be doing more, but in trading, less IS more. I will now tell you 2 things that I wish more than anything else an experienced trader had told me when I started out:
1) As a beginner, focus on a very, very narrow selection of trading instruments, in fact, even just one. An experienced trader can trade anything and come out net positive. This is where you want to be. But to get there, a beginner must focus fully on learning how to trade. If you are to succeed, you must be able to pass the test where someone throws any stock or market at you and you look at the price action and you trade what you see and come out either net profitable or with a very minimal loss.
Leverage is not an edge. Averaging into a counter-trend trade when price has moved "too high" or "too low" is not an edge. Holding a loser through a large drawdown until it eventually becomes profitable or at least break even is not an edge. These are tactics that can work very well for a long time and lead you to believe you have an edge, but they can also wipe you out.
2) Go with the trend. As a beginner I didn't know how to go with the trend. I did quite well as a counter-trend trader until my strong opinion about what was reasonable overrode the reality of what was happening right before my very eyes. A trend is established when the majority of market participants are expecting price move higher or lower in their favor. As a beginner, nothing is easier than playing on a winning team. If you've never played softball before and you join a team that's at the top of the standings, you will enjoy being a winner as you learn the game!
Later on you may find that counter-trend trading, or jumping on every stock that's in play that day, is your ticket to riches. These are tactics for very experienced players and even experienced players can get burned this way.
But as a beginner, learn to trade successfully by doing what's easiest.
Learn to read price bars as a gauge of crowd sentiment. Learn when to enter and exit based on price action alone, not what YOU think should happen. Learn when a trend is approaching an exhaustion point, take your profits, then wait for the reversal signal to get in on the new trend (the second mouse gets the cheese).
Make sure your biggest losing day is never more than your biggest winning day.
Put in a max loss to ensure this. A max loss per trade, and a max daily loss.
Always have an advance plan and an inviolable exit strategy.
If you EVER find yourself thinking while in a trade, STOP. You pre-plan your trade and that means your exit point is pre-planned. No matter what you think, only move stops in your favor.
Looking back, we can all see why we were wrong and should've known better
Keep making notes and analyzing your trades, and eventually you will come to trust your edge enough to be patient in waiting for setups, put on a trade without hesitation, and exit based on what makes sense at the time.
