Not long ago I wrote about my overconfidence and how I should stick to my own rules to avoid making mistakes that I already made in the past.
Surely enough I again made those mistakes. I had the right idea when I spotted the risk of getting cocky, but it was simply too late when I slammed on the brakes. My own inertia made sure that I would make a few boo-boos. The good news is that by being aware of the potential risk I was able to minimize the effect of those mistakes.
That said, I also introduced a few changes in my trading that feel quite positive. These are all things every trader learns to do very early on, but I wonder how many of us really do them;
I started planning my trades before going in: While I have been sucked into a few trades against my better judgement (looking at you, YECO, PLAG, PTI...), the majority of my trades this week have had a plan that acted as a great reference point as the price action unfolded.
I calculate my position size based on my risk and entry: Based on the trade plan I create and my account (of which I am risking 1% at most), I calculate what is the maximum number of shares I am allowed to buy for each one of my trades. This allows me to remain much more calm when I am in a trade and let the trade follow the plan rather than getting emotional and collecting gains early. That said, singles are still great!
I am not holding any bags: For the first time in a long time! This is both an achievement and a commitment to myself; sticking to the plan when it is time to cut losses is a priority. Not allowing losses to get out of control and turn into dead weight for your account is vital. That is something I allowed to happen for way too long and it will take a constant effort to keep under control, but it is possibly the single best thing I can do as a trader at this point of my career.
I keep a detailed trading journal: I use excel to record each one of my trades along with a screenshot of the graph. Reviewing them at the end of the day and the week really lets me see very clearly what my strengths and weaknesses are.
I see these new habits as the basis upon which to evolve. While it will still take some effort to stick to them I also intend to keep growing by:
Focusing only on the best plays: Reviewing my trades lets me see how many times I make stupid mistakes or straight up gamble. The idea is to focus on:
Solid morning dip buys (my best pattern).
I will keep practicing afternoon breakouts (getting there) and first green days (kicks my butt every time), but with smaller positions.
Studying: Admittedly I am not the student who has seen the most lessons. However every time I do watch a few videos on a certain topic I do refine my knowledge about it. I need to make studying a daily routine.
Building my life OUTSIDE of trading: While I may not have seen every lesson, I spend every waking moment thinking about how to refine my trading, testing, analyzing, watching the markets live... It is my passion, but it also takes a big toll and I do get burned out. I need to focus on doing activities away from the computer that give me a chance to get back at it energized and with a fresh mind; yoga, swimming, soccer, kickboxing...
Right, plan is laid out, time to take action.