Trading Psy Ops # The Cardinal Sins of a Trader
On the weekends, apart from spending extra time at home with the loved ones, I keep aside 4 to 5 hours for self-education on trading. And somehow, I don't feel like 'doing' this as an assignment, it is now natural for me to explore unknown avenues to see what extra can be done to improve further from here.
This week, I was going through all my failed trades (Both Intra and Positions) and trying to identify a pattern for taking those trades. Just to be clear (so that I don't blame my systems), I filtered out those trades for analysis which were taken without referring the system (less, now a days, but still non-zero).
So here are the common issues which influenced my trading mind. I am sharing this cause I am sure, I am not alone a victim of this. And probably putting these in black and white with neat and clean bullet points , would let other also realize the cardinal sin of being a retail trader and where we need to improve. Here we go:
- Taking a trade just because my systems are not generating any signal and I have run out of my patience (Error # 'Not following the system)
- Taking a trade well before the price came to the selling level - e.g, bias is negative, as per analysis, you expected price to be jacked up to a level which is good for short, but since this did not happen for sometime, entering market at current price only to find price doing a MAE and reaching same level as per earlier analysis ( Error # 'Early Entry'). And it really more painful as you already did the hard work earlier to find your level of entry - just could not stick to the plan.
- Ignoring position size - does not need much explanation. Only reason I found when I did this when I had gone through a losing streak. The outcome sometimes positive (erasing out last 3-4 losses), but when it goes wrong, well..you know how it feels (Error # Oops I did it again, wrong size). Just remind me the same prabochan of TD - " Trading is a business where no one wants to grow slowly, that's why nobody grows"
- Taking aggressive trade out of over-confidence due to sequential winning streak- Just a like a losing streak can make you feel down, a winning streak (at times I had 15+ on Nifty) can make you feel that -Oh Boy you have figured it out in trading' - and that is exactly the time market decide to smack it on the face. (Error # Over trading)
Frankly speaking, it is rightly said - it is difficult to reach a top slot, but it is far more difficult to stay there. In trading terminology - defending the won over points are more important that increasing the same every day.
Why I post this (my problems in trading) - 2 reasons:
- I am being honest, that in spite of being profitable, I am far (light years) from perfect and have enough problem to rectify
- It is said, if you want to fix some problem, you first need to recognize their existence. I just did my part. Would encourage if all of you can go through your past trade and find out the most common Cardinal Sins of yours in trading and keep those jotted down somewhere - trust me, it is going to help.