Friday, February 13, 2009


I've been thinking about my trading lately and what to change so I could have more reasonable trading sessions. First of all I started to use R system so it would be best to be aware where I stand with it cumulative for the month. Problem each day is that I start from the zero and then I'm reluctant to take the loss. I think that I should start from cumulative R for that month so a loss will lover it slightly but will not put me in negative territory. This is all mind tweaking thing, nothing new. Also about that averaging habit of mine. I should look more carefully in each trade where is the point of invalidation of my view and where is the point that I will cut my loss. If it's not 20 as I usually put for R I should have smaller size for start of that trade. There is nothing wrong to average a losing trade if I think that my overall idea is still correct or that I have spike against me that I can use to make bigger position if I still believe in it. I have to commit that I will exit my losing trade at 1R, it's variable, it can be 1.2, 1.3 R no problem, but not letting it run against me just because I don't want to have a loss.
For example I have a stop of 30 pips on a short trade and it goes against me 22 pips and now I believe that it will go down. I average with the same size trade. That doesn't mean that I will let that second trade go against me also 30 pips because it would be -50 from my original entry and for my style I'm then most definitely wrong. But if it goes against me I got to look to exit first trade around 1R or 30 pips. Stop taking those two trades as one. Exit first and then decide will I exit second at the same place or what. Second is then at -10 pips let's say and if I don't believe it is going my way exit it also and I lose around 1.3R on those two averaging trades together. That is acceptable. If I'm right and I'm right enough times that I'm coming back to averaging again and again I have now two positions that can give me fast b/e or 1R or maybe more.

With this tweaks if they will work for me I wouldn't have a problem of taking a loss because I don't look at day session any more and is it positive or negative but whole month. Second I will be reasonable with averaging when I do it. If you can't win against an enemy make him your friend. That way I would avoid mindless risks and stressful emotions. Until now with this averaging thing I just didn't have exit strategy except to average down until it goes back enough which is as stupid as it gets.


StockHunter said...

Now your starting to sound better! Even though I don't like averaging, when you put it together in a system it's much better. It was when you were averaging just because it wasn't going your way is when it wasn't a good thing.

FX said...

Honestly I would like that 99% of my trades are without averaging also, but if I got that flaw, let's minimize it.


Sounds like a solid idea to me!