Sunday, July 26, 2009

What's Your Excuse?

Lately, I've been thinking more about my forex trading money management strategy. I have yet to implement my new money management strategy below, but was my old one a double edged sword? Is my new one better? Am I contradicting myself to my detriment?

I'm always getting out of the market with at best + 10 pips. This happens on the majority of my trades. I know the more serious traders out there probably think this is really bimbo and maybe it is. However, I've done much worse in the past. Before, I was one step forward, five steps back. Now, I'm one step forward, two steps back. Is that ideal? No, but it's an improvement - so one gold star for me, although I'll hold off on the couch-jumping until I actually start making serious profits.

My best win YTD was +249.08 pips. My worst loss YTD was -74.33 pips.

I haven't had a really good trade since January.

Technically, I'm losing 74.77 pips this year. Don't forget I also blew up my trading account about two years back and am still not breakeven.

There's no turning back now. I've got my work cut out for me. If I keep trading little black dress (bearish divergence) and little red dress (bullish divergence) and finetune my money management strategy, my strategy is going to be sustainable. I have stopped the downwards trajectory and that's a small victory.

I know I have to keep at it - it's boring and I'm going at the pace of a turtle, but turtles are known for their longevity.

I honestly asked myself, am I still making excuses for myself for not being a better trader and for not going faster?

Well, I've now got:

1. a better strategy than coin flipping
2. a much more level-headed perspective on the market


What have I got to improve?

1. continue to keep my discipline
2. do the analysis and trade my plan - don't get into any more impulse trades (what really killed me was trading FOMC and the stop & reverse & reverse thing I did back in May when I was experiencing total emotional volatility)
3. my money management - particularly where trailing stops is concerned (i.e. what is the best way to trail your stop whilst staying in the trade?)
4. figure out exactly when my strategies will work best - under what market conditions should I use little black dress (bearish divergence) vs. little red dress (bullish divergence)?
5. stop making excuses for myself. If I'm just scared of getting into a trade, I need to confront those fears. And if I'm going to condemn myself for not getting into the trade in the first place, at least I should make it a real learning opportunity.


This week, I'll be travelling, so I won't be trading or blogging all that much. Perhaps the extra time to reflect on my trading is just what's required at the moment.

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