Monday, April 8, 2013

Trading patterns

Asking yourself, "What is the common denominator behind my different trading mistakes?" begins the process of finding patterns of patterns. - Dr. Steenbarger in The Daily trading coach

I've been reviewing my trading log over the weekend and I noticed one common theme. My losers are unnecessarily large. My win rate is quite high, 5 winners to every 1 loser, but my average loser is 3 times the size of my average winner. Granted a couple of trades were not my fault, but still, the fact is that I need to cut losers quicker.  So its important to identify what makes me get into the frame of mind where I tolerate these losers.

Anyway, moving on..

I shorted NG last night, covered this morning for a nice gain. Risk to reward was 2:1 on the trade, but I took very little heat on it. I put this trade on from 2 different accounts, so that was cool. NG sold off a lot more this morning, but seems to be holding support.

I've had some other good trades today in TF, KC and 6B, but I am disappointed that I missed on all the setups I posted this weekend. The setups I posted are:

  • I was absolutely sure that ZB will end in red on Monday, yet I did not short it. 
  • Said I'd look to short 1554 today with tight stops above, did not do it.
  • Said I'd look to short TF at 922 on Sunday evening, would've worked out nicely, did not do it. 

Hmm, need to respect my own work and stick to it. Still looking to sell TF around 930ish, a trade I will take.

I also talked to Chris today about my win rate, and losers being larger than winners. He said I should focus on larger winners, although it reduces my over all win rate. His win rate on trades is less than 50% but he consistently comes out ahead. Something to think about. 

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