stoictrader

Mistakes Were Made – Jan 2012

In Mistakes Were Made on February 9, 2012 at 8:37 pm

I intend to write a post every month called “Mistakes Were Made” where I examine the previous month’s trades.

In January 2012 I lost 1.5% of trading capital.  Mistakes (unforced errors) included:

1. Overtrading.  

I made over 200 trades during the month (many/most of which were small, being about 20% of normal trade size).  Some of these were anticipatory trades in an attempt to get into a move early; others were trades that I followed others into after quickly researching but which were not within my core competence.  With such a large volume of trades (for me), it was difficult/impossible for me to closely monitor each one and to have clear TP targets and effective stop management.  To correct this, I need to wait for patterns to prove themselves and wait for the best entries.  I need to be better about identifying profit targets within the same timeframe that the trade was identified and to diligently manage stops and profit taking for every trade.

My average profit on profitable trades was generally 50-80 pips (including a couple over 300 pips) and my average loss on losing trades was generally 20-40 pips.  I am broadly pleased with this outcome and shows I cut losses more quickly than profits.  My average trade duration was 1-2 days which is lower than I expected.  My win ratio was about 30-35% which is lower than I would prefer but works if average profitability on profitable trades improved slightly.  For such a low win ratio and so much trading, the limited loss of capital isn’t a bad outcome; but it should have been an equity positive month.

2. Inconsistent journaling/record keeping.  

Since I took so many trades, I didn’t journal everything which makes it difficult or impossible to learn from mistakes and capitalise on successes.  I excused myself from proper real time record keeping on the small trades which I will cease.

3. Deviations from trading plan.

I took some random trades that would have been clearly outside of a trading plan and wouldn’t have been taken if I was reviewing a trading plan every day or before each trade. My formal written trading plan is a little out of date and I need to update it so that I am more consistent about using it as a tool.

Feel free to leave comments or suggestions.

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