I continue to work on correcting the mistakes that I make.
I like to take the contrarian trade and with that mindset I tend to be aggressive. Im sure that there may be other things that I am missing, but what I have come to realize immediately is that I tend to view too many indicators AFTER a trade is on. The focus that I gain prior to putting on a trade is lost after I have that trade on.
For someone that has intensely studied Elliott Waves I have found it difficult to marry to just one other indicator that fits me- but for trading purposes.
While I identify my trade off two or three confluences, I execute my risk and reward strategy using only one theory. This basically becomes MY theory and how I simplify the trade. Again, the set up may be based off two or three (ex; trend line, volume, fibs) but the execution is based off of one which generally consists of three price points; the entry, profit target and stop loss.
Once in the trade however, emotionally things are not as cut and dry and this often leads to sorting through the lot of theories and indicators to prove the trade “more true”. While I do not over-think a trade during execution, this is precisely what I may do once I enter. Am I not doing enough homework, or am I just fooling myself after the fact?
In the past a pattern existed in which building a trade set up and executing lead to ramping up an emotional set up as well (positive or negative) after execution- and to adding more risk to the trade. I may not have wiped this slate clean, but here is a simple and essential step I have become more dedicated to that has helped.
I have begun a more thorough recording of trades. Adding a few less available variables to the mix like: max heat before gain, max gain before stop, psychological/technical target bought or sold.
Max heat and max gain before stop or gain are very important statistics, which I didn’t come up with myself but never used. They can tell you if your risk reward is too aggressive, if you are not picking the right trade set ups and add insight to how you should execute to control risk and hold onto profits.
The technical or psychological targets bought or sold are very important notes about each trade and can be abbreviated to view in a data pull more easily. There should only be two or three of these that answer the following; am I using too many strategies, is there one that stands out as a winner or looser? This helps with focus and the pressure to make trades.
So far the exercise of recording only a very small pool of trades with these additional variables and visualizing this data has curbed, after much lack of success, my emotional connection to trades and indicators. Not to the point where I do not allow myself in real time to see/feel where a trade is not working, but that in their infancy I now truly believe that all trades have a 50/50 chance of success. Realizing this can help cut the umbilical to adding risk after a trade is on.
All this is very elementary to making good trades for anyone with any experience but it can be overlooked via past successes or neglected as an ego gets too big.
Most recently I have found the impromptu seminars and recordings of FT71 to be helpful and highlight not only the emotional boundaries of trading but the importance of finding this balance in the scrum of your data. He is also a veteran trader and volume profile expert. In particular, anytime you (I) have a bad trading day, are not following rules, have reached daily loss limit, or are even responsibly sitting out of a market you don’t wish to trade listen to this for starters Fed Day 3/13/12 post market talk by FT71.