It's crystallized now that I have another compulsive behavior in trading. First there was averaging (adding new position in the direction of previous that is in the loss) I averaged and averaged, there wasn't day without it. Somehow I managed to leave it behind by trading full margin (so there is nothing to average with any more). Then came moving stops (widening). I couldn't stand stop being hit, so from small initial stop some trades run to five times bigger stops. Now I compulsively enter so many trades and take small losses on them all in the anticipation of big run. Big run that will cover all those stops and make some profit on top. So again today I had 22 losing trades in a row and one scratch. Average loss on them was 3.7 pips, you do the math. That's simply unacceptable.
I need to abandon trading without clear setups. All this today were anticipatory trades in which I try to catch big move. I don't have clear scalp setups. There are no setups that I see or wish to take, but I trade anyway. Sometimes that big move comes and all is golden, but on days of smaller range there is no real move. So I'm left with my numerous small losses. That is not the way I want to trade.
So finally I decided to use max daily loss of around twenty pips. It's not to prevent big losing days, but to prevent my mind from looking for that saviour trade. It wouldn't matter if it comes or not because it will be to late. It will be unpleasant at first, but that's the point. I expect that it will hurt so I will not do it again. I really don't have a problem with getting stopped on a trade in which I believed and get daily stop that way. But if those nonsense trades bring daily stop I will be probably enough frustrated to be wiser next day.
-47 pips
Tuesday, October 25, 2011
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