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I had an interesting day today. Now that I've posted my results publicly, I found myself trying to live up to my past performances. But instead I lost money.
As I was reviewing my trades I remember thinking "I need to recover this lost" so I started extending my targets and hanging around too long in trades that weren't working. I even extended my stop once which lead to my biggest lose of the day. I made a lot of mistakes today that I had since stopped making. I feel now that it was performance anxiety.
I wanted to continue to post good results. I find this very interesting that this affected my trading and wonder if the same thing will happen if I decide to join TST. Knowing someone is going to be reviewing my trades made me want to put on a grand performance. Instead ended up losing over $1200. Boy, do the challenges ever end?
One big thing that helped me tremendously was limiting myself to one or two trades a day. This drove me to look for the best setups before wasting my limited executions. This was with fixed stops of course.
Done for the day. Recovered most of my losses. It took a minute shake myself back to reality. I'm allowing too many distractions and outside influences. More on that later.
This post had me tossing and turning all night. Why? Because it's one I don't subscribe to common trading rules. I'm sure you referring to the rule "Never extend your stops". Right?
Well, the first thing I have to say about that is, who's rules? If you are talking about the list of rules fed to beginners then those are not my rules. I learned a long time ago that I had to make my own rules.
The next thing I have to say about that is, how many times have you heard successful traders say (in interviews) that they don't even use stops? Or that they use "mental stops"? Or "catastrophe stops"? That's how I use stops now.
Don't get me wrong, it is a good rule for beginners because they're going to be wrong most of the time and they need to limit their losses. But I found that if I work on getting my entry right, I never need a stop. In most cases I only use a stop after the trade has gone far enough in my favor that my stop is less likely to get hit. That's why I placed the stop yesterday that got hit. It was at breakeven when I backed it up to give the trade room. But that reaction turned into a short covering rally that took out my stop and immediately reversed. Had I not place that break even stop, the trade would have been a big winner. But the real reason that trade was a loser was because I hung around too long. And I'm absolutely positive that the reason I did that was the slight hangover and sleep deficit I was suffering from the weekend. It was lazy trading. I should not have been trading at all. A better rule would be "don't drink too much and get plenty of sleep". Another good thing to learn on sim...if you take the time to learn from your mistakes.
But don't get me wrong, beginners should definitely use stops. But beginners should also be trading sim. I don't know of many high paying, risky professions that train their candidates in real life situations from the very beginning. Not doctors, not lawyers, not pilots. In my opinion, sim should be used for more than just learning your platform.
I started to see improvements in my trading when I stopped following the same rules that the majority of traders were following. We all know that the majority loses. I was one of them for years.
You have to make your own rules. Even if you are lucky enough to find a competent mentor, the way they trade is highly unlikely to fit your personality exactly. You are going to have to tweak things to your liking. That's what I had to do. But having a mentor is definitely a great starting point. It will allow you to reduce your learning curve and avoid career ending losses. Too bad a good mentor is so hard to find. At least I never found one.
I hope this response wasn't too harsh, but it's those "rules" that kept me losing money all those years. Yes, we all need rules. I have mine. But I created them. And they work for me. And that's all I have to say about that!
I've actually considered this approach and likely one I will start with. But I found that when I'm "in the zone", I can "run the table", meaning get a nice string of winners. But I still think it's a good starting point.
I created this post because I'm getting close to going live. The thing that has held me back the most is feeling I can trust myself to do the right thing. As I've gotten better at trade selection, trade management, and reading price action, I've gotten more confident. But when I do make a mistake, I put off going live that week. I want to make sure that I have learned from my mistake or that I understand why the trade failed, and how I could have avoided the loss. I find that there is always a reason. It just may not be obvious.
First of all, you are doing the math wrong. You have to cut "Volume" in half because Tradervue is counting executions, not contracts. Each contract equals two executions, a buy and a sell.
Secondly, I'm practicing with TST in mind, not my funded account. I've tried trading 1 lots. I'm no good at that. While my broker (Ninjatrader) has $500 margins (I think), I would never trade 12 lots with a $6000 account. The most I would trade is three, but I'm not trading 1 at the moment...so there's that.