Tuesday, April 7, 2009

Nonorthodox decision

When things go bad good ideas came to mind. Like today, I was able to see a lot's of bad things about my trading and then thought how to tweak things to make them more optimal. When you trade good you just trade, it's harder to think about changes, there is no need. Well today I finally decided on one thing that I will easily implement. I wanted to do that years ago but I always talk myself out of it. Before when I had daily goals I was near it. My new decision is to cap my upside potential. So I will stop trading when and if I achieve 20 full size pips in a day. With this decisions I'm putting out of commission a lot's of things that make me problems and turn me away from profitability. For example if I know that is the maximum I will take in a day I can't be mad because I didn't take more. I will not have a need to capture majority of daily range or big trend and I will not have frustration if I fail to take much. I will not count on some big trends to bail me out. I will not be able to justify big risks with dreams of big profits. I believe that this decision will organize things naturally and they will fall in it's place. I will have framework and then all I do will be more or less based on it.
I feel that possibility of bigger profit and my urge for it is basis for a lot's of mistakes that I've done today and on many other similar days and situations.

Until now I've done various things in my daily trades and my results varied too much. Idea of bigger payday for me is unprofitable. Because of my psychological characteristics, being noobie and amateur it turns out like some greed quest. I never cash on it but every other time because if it I make big damage. I will not lose much with capping my profit, I'm totally happy with 20 full size pips for a day so better to bring more conservatism in my trading. I act like I'm totally in control of situation, at least my inner feeling is that, but things totally fell apart because of that pseudo security in my abilities. Better to underperform and earn less and be safe and conservative then act reckless with false assurance in my abilities. So what if I'm able to do more but I chose to do less, to whom am I proving myself? Baby steps can be enough.

I'm not talking here about a down side and capping my losses. If I'm emotionally stable enough I would do that naturally. If I'm mad and emotional I don't have control of things so any decision now doesn't mean a thing. Generally 20-30 full size pips should be the most I lose in a day.


ryan said...

I started setting a daily profit goal too. Something not too stressful and within my skill range to obtain every day I trade.

It helps reduce the stress, for me, and provide a reasonable goal.

FX said...

Yes that is a benefit also. My intention is to drop dreams that suck me in lot's of troubles and trade realistic. This will give me reality check.

Nice blog ryan, I added you to blogroll.

StockHunter said...

Good idea, it should help keep greed away.

Jules said...

Me too, FX, I learn only when I mess up my trades :-)

Setting a realistic target is good. Without a number in mind, I tend to just keep going in for more, and only stop when I start giving back some of my profits ie. when I'm so exhausted I've totally lost focus.

FX said...

That also Jules, for me targeting more get's me all delusional. Biggest mistakes are all made around some greed factor.