HedgeFundLIVE.com — I’ve been trading every day now for about a month. I had some prior experience in the financial markets, but nothing that I can really incorporate into an intra-day trading system. I’ve learned that my major weaknesses are being too patient and being too anxious. Wait, those are opposites, how can that be?
A month ago, my P+L would plummet while I held losing positions. Not only would I hold them, but I would typically double them as they went down. The hope was that I would make my money back twice as fast. As you can guess I realised with encouragement from better traders (Mark Moskowitz) that this was exactly the opposite of how traders become successful.
The correct way to handle a losing trade, is cut it in half or cut it completely once it has reached your INITIAL stop level (not the new stop levels you keep convincing yourself will hold). This kind of losing is what I would call, being too patient. On the other hand there is being too anxious, it just as dangerous.
I have noticed lately that I enter trades at the end of big moves, right when they are about to snap back or at least find support. This is when I am too anxious to join. A lot of times, the move is so huge that I feel like it will go on forever. Although these types of moves always indicate my plan’s sell or buy signal, that doesn’t mean they are a lock. This kind of mistake is called “being late to the party”. The move has already happened, and even though it looks great, its not.
Click Here for full article.
Business Insider Emails & Alerts
Site highlights each day to your inbox.