stoictrader

Mistakes Were Made – March 2012

In Mistakes Were Made on April 17, 2012 at 4:29 pm

Every month I post a few thoughts about trading mistakes that were made in the previous month and how I might correct them in the following month.

Last month (February), I felt that I was moving stops to break even too soon, wondered whether I should take partial profits, and realised I was not identifying targets well enough.

In March I was basically breakeven, with a slight loss of less than 1% of trading capital.  I am making a conscious effort to take fewer trades and I brought the total number of trades down again this month to 32, so 1-2 trades per trading day.  I’d like to get this to 1 per trading day, and then to the point where I am taking only the best 1-3 trades per week.  My win/loss ratio in March was over 50% (which is unusual), but my profits were smaller on average (about 30-50 pips) and losses larger than average (about 50-100 pip range).

During March I took partial profits on a number of trades, which explains why average profit size was down.  I was still stopped out of a number of trades at break even, which is more paletable when some profit was booked.

Mistakes (unforced errors) included:

[Click into post from main page]

1. Not selective enough about trades.  Looking back at my trade log and screen prints, my winners look pretty obvious – entry was at a nice borderline, pattern was complete, etc.  Likewise, many of my losers were not the best trades, I was early or not selective enough. Out of 32 trades in the month, two trades accounted for most profits, and three trades accounted for most losses.  Being more selective should be simple (if not always easy).

2. Lots of break-even trades. The majority of all trades during the month were break-even.  While limiting losses, it is also limiting profits.  There is more work to do here and I need clearer rules in my trading plan for each trade type about when to move stops to break even.

3. Order error.  There was one trade during the month where I was intending to enter a limit order at a good and appropriate level but I accidentally placed it as a market order (i.e. early).  Instead of cancelling the trade immediately I decided to let it run from the market level.  This ended up being one of my biggest losses of the month and it never would have triggered as a limit order.  Great lesson.

4. Targets were not clearly identified.  I am still not identifying targets well enough and/or my targets are not being achieved before the position is closed.  I need to continue working on targets in conjunction with my rules about moving stops.  Any ideas?  Please leave them in the comments.

5. Trading the plan.  I am getting more diligent about following my trading plan, and the plan is getting both more general (themes and process) and more detailed (specific trade types).

Comments or suggestions welcome!

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