Skip to main content

You’ve Got a Great Trading System So Why Are You Losing?

 

You’ve done your homework. 
 
Countless hours of seeking out the right guru (or piecing together your own system). Weeks of monitoring your guru’s daily trade picks (or papertrading and back-testing your homemade system). You’ve done it by the book.   
 
No seat of the pants trading for you!  
 
OK, now you’re confident. It’s time to put your money where your homework is.  
 
You’ve had your coffee and your first trade signal is before you. 
 
Confidence high. Trade made. First loss. Not a problem.  
 
You understood before you started that successful traders both win and lose and “losing is part of the overall winning”. You’ve also heard more then once that “successful traders don’t win on every trade.”  
 
Moving on, still confident. Next trade made. Another loss, but…  
 
This one hurt your pride a little because you got stopped out early in the trade, and then the market rebounded and would have hit your profit target if you weren’t stopped out.  
 
You double check.  
 
Yep, you placed the stop where your trading system told you to place it.   
 
You kind of had a feeling that the early weakness in the market was just profit-taking from the previous day’s trading, but you’re trading a system and you must stick to it. Wounded, but resilient. 
 
After a good night’s sleep and a few mouse clicks, your new daily trades are in front of you.  
 
Hey, this one looks good! It’s a little bit more risk than yesterday’s trades had, but look at that profit potential!  
 
With a smiling face, the trade is executed. With a nice start to the trade, you’re feeling good and you’ve moved your stop to breakeven, just like your system said. 


Surprise piece of news! Market reverses – blows through your stop – an “unexpected” loss.   
 
Is something wrong with the system?  
 
Has the overall market “personality” changed, affecting your system to the core, rendering all your back-testing irrelevant?  
 
Your confidence turns to doubt. 
 
You decide to “watch” the next trade… I mean, isn’t it wise to make sure the system gets back on track before you “throw good money after bad?”   
 
Isn’t that what a conservative trader does?  
 
Trade watched. It wins!   
 
In your head, you beat yourself up a little because you know that when you started your “live” trading, you made an agreement with yourself to take the first 10 trades “no matter what”… and here you wimped-out and missed a big winner that would have gotten you even. 
 
What’s happening?!! 
 
What’s happening is that you are out of control.  Your emotions are ruling your trading.That's what i try to make it perfect for my students , and hence they have an edge over others .
 
The above scenario plays out in every trader from time to time... newbie and veteran alike. 
 
The winning trader senses what is happening and nips it in the bud. The winning trader spend time EVERY DAY, working on “the discipline of trading”.  
 
He/she reads a chapter in his/her favorite psychological trading book, scans the “ten commandments of trading” that hangs on the wall over his/her desk, listens to his/her mental training software for traders…  (i have a music playlist of raps , which work for me and some qawalis )
 
Something… Every Day… before trading begins. 
 
There are many more losing traders than winning traders… and it’s seldom about the trading system.   
 
In my career, I’ve come across at least 30-45 systems that I consider A+, yet I know for a fact that MOST traders that have traded these systems have lost. And i prefer to stick to 2-3 systems that go the best with my personality . 
 
Why? They lost 

They were not in control of their emotions.   
 
Are you?
To read the whole series of blog on mental fitness 
-- FOLLOW THE BLOG TO GET IT DIRECT ON MAIL --
Instagram | Telegram - wisemantrading

Labels:

Comments

Post a Comment

Popular posts from this blog

THE 25 - POINT MANTRA DISCIPLINE FOR DAY TRADING

The Wheel of Success in Trading  There are three spokes that make up, what I call the Wheel of Success as it relates to trading.   The first spoke is content Content consists of all the external and internal market information that traders utilize to make their trading decisions. All traders must purchase value-added content that provides utility in making their trading decisions. The most important content being internal market information , which is simply time and price information as disseminated by the exchanges. As we are making our trading decisions in present time based on time and price, In order to "scalp" the markets effectively, we must have the most live up-to-date information . The second spoke is mechanics Mechanics is how you access the markets and the methodology that you employ to enter/exit your trades. You must master mechanics before you can enjoy any success as a trader. A simple keystroke error can result in a loss of thousands . A trader can ruin his e
Post a Comment
Read more

Exit Beliefs -

we considered a few questions: Should we use a tight stop loss to cut any losses quickly or a wide stop loss to allow some room to move? How quickly should we move the stop loss to breakeven? Should we take profits at a target, or should we let the profits run, perhaps trailing a stop behind the price? In attempting to answer these questions we looked at a number of charts, chose entry criteria, and then looked at possible options for the exit. And this is what we discovered: Firstly, in each case, the profit or loss taken out of the trade was more a result of our chosen stop and exit method, not our entry. For the same entry, there were numerous possible exits, some profitable, some breakeven, and some at a loss. And secondly, we cannot know, except with hindsight, what will be the most profitable exit strategy for that particular trade. In other words - the exit is more important than the entry. The exit has more bearing on whether the trade ends in profit, or in the loss. But there
Post a Comment
Read more

Pre Stock Market Report, September 04, 2020

  Pre Stock Market Report US markets tubled. Nasdaq down more than 5%. For the last two weeks, US markets kept moving higher. Today, very important data, Jobs data, is due. So markets were over bought, ahead of a key data, profit booking came. But the profit booking is so severe that Nasdaq has fallen more than 5%. We have already seen 2 such profit booking in last one month. Last month, Nifty fell from 11400 to 11100 intraday. Last Monday, Nifty fell from 11800 to 11350 intraday. When it comes to correction or crash, we always do first. Even in 2008, we fell in January, way before other markets. Today's data on Jobs is expected to be good but Private Sector Jobs data that came on Wednesday was not good as expected. That could be one reason for such a huge profit booking. Moreover, when real Economy opens up, money should move from new Economy stocks to old Economy stocks. Going forward, Dow is likely to do better than Nasdaq. But Asian markets are not reacting as bad as US. Even D
Post a Comment
Read more