My 4 worst trades from last week

A quick & effective approach for improving performance is to reduce the number of errors. Consequently, here are four trades from last week in which I made two types of mistakes. Each trade is illustrated with screenshots for each trade, from last week’s trading sessions.

The idea is that by looking at them closely in this manner, it should help me to avoid the mistakes in the future.

The first mistake was to do with trade management.

In three of the four cases, the trade setup worked – meaning that price moved into the direction that I had anticipated to a significant degree without getting near the stop I had initially put in place.  Nevertheless, the result of the trade was either a loss or a scratch due to my trade management.  I managed the trades differently than what I had planned/set out to do.  Here are the trades:

458

 

469

464

In the final situation, the mistake was to do with setup selection.  

On Friday I had adopted a bearish bias on the DAX, thus looking for short setups.  Into the afternoon session, I continued to look for bearish setups despite a number of things occurring that should have made me question the validity of my bias.  The following things had happened:

  • the price action was showing good support at the 11,700 level
  • price had made higher lows from 1.30-2.30pm compared to 9:30-11:30am
  • EMA10 crossed over the EMA20 in bullish direction
  • price was firmly above both EMA’s
  • the Dow was doing virtually the same.

I need to remember that the bias I adopt at the beginning of the session could become invalid as the session progresses.  Additionally, as a whole the 5M chart looked quite messy by the time of this trade – I have made a note to trade primarily “clean” charts and to avoid the “messy” ones – I feel that to a large degree I have been succeeding in doing so already, though clearly I slipped on the DAX trade below:

471

Why do mistakes occur?

I believe that when reviewing trades it is important to not only spot mistakes, but also to think about why the mistake occurred – what went on in the trader’s mind – were the mistakes technically driven?  Were they psychologically/emotionally driven?

This entry was posted in Psychology, Reversals Strategy, Trade Management, Trend-Following Strategy. Bookmark the permalink.

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