Lessons learned from last week’s trading …..

The week felt very terrible even though the overall loss was only 1.01R (£250).  There were 4 winning trades, 3 scratch trades and 9 losing trades.  The average winner was 0.81R and the average loser was -0.47R – thus the RR ratio was 1.72. Ideally I want to be making money (obviously!) – but losing 1R in a week across 16 trades is not a horrible result – it just felt horrible – most likely because all the winners were on Monday, and then I spent the rest of the week giving it all back.

After reviewing all of the trades (took about 1.5 hours) I came up with several points, all of which go a long way towards improving my results the next week.  I gotta say, it makes me sound like a very gumbie trader!!

Summary of points

  • Set tight stop losses – no need to be over-generous with stop losses – place your stop loss at the point where you can pretty much consider that you were wrong with your ‘prediction’ – imagine sitting in the trade and seeing the trade go against you – how much are you really willing to take?
  • Protecting the profit – we are looking for trades that go swiftly toward the set targets – if price starts going sideways or retraces a lot, then those are not trades that I want to be in – be more aggressive in getting out of winning positions – there are too many cases where winning trades turn into small losers or scratch trades – I know this is not specific enough – it’s an area I need to work on
  • Calculate the position sizing correctly and perform all the 5-6 checks that I listed earlier in the week
  • Only trade when the trade meets one of your strategy setups – initially I will need to physically write down the reasons for why my setup parameters are being met – and specifically pursuant to which strategy I am taking the trade [This probably applies to many of the trades that I have taken this last week – strictly speaking, quite a few of them did not meet strategy setups]
  • The previous point also assumes that the strategy setups are documented – which I still need to work on
  • Wait for confirming price action on completed 5M or 15M candles before entering into a trade – or in some cases to stay in trades after you have seen a big retracement
  • For continuation trades, only use 0.25R until I get comfortable with the setup (or until I discard the strategy)
  • For EVERY trade
    • 1. Take a photo of the chart when you enter
    • 2. State the reasons for entering the trade
    • 3. Make a note of how you plan to manage the trade
    • 4. Make a photo of the chart once the trade is over – include the entry, exit, and the movement of stop loss throughout the trade
    • This will help me in learning from each trade that I take – and it will help me verify whether it actually was a valid setup or not
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