Monday have been a great trading day. Just after the market opens I already profited a lot. But all of this went out come Tuesday as I added more positions. The weakness in my trading is when there is a pull back or false breakouts. I added more positions and when pullbacks and false breakout occurs, stop loss gets hit and my profit down to the negative red.
The reason I am writing this is to document in this journal that I have messed up. And realized that there is one weakness in my trading style. That is, when pullbacks and false breakouts are coming, I don’t have any way of knowing or reducing the risk. This is the 2nd time that happened to me. Right after the EURCHF breakout, I made quite a little bit of loss after the breakout because of position sizing when the short pullback occurred.
Maybe the reason I messed up is because I am too greedy. I always think that “it might go on some more so I will add more positions”. But the pig gets slaughtered. I must be wary that things will need to rebound for a while. The solution would be knowing when.
How Would I Know This
The only thing that comes to mind is patience. Patience to wait for a confirmation bar that the trend have ended or a reversal is coming and accepting it. Party’s over, you need to get out. Easier said than done. Because patience is not a system but a character trait of the trader, a virtue if you will. Practicing patience would more of a challenge than testing any trading system. Add more positions only after the bar for that day has ended. And it has indicated of a clear signal that a reversal is not yet coming.
Patience is the state of endurance under difficult circumstances, which can mean persevering in the face of delay or provocation without acting on annoyance/anger in a negative way; or exhibiting forbearance when under strain, especially when faced with longer-term difficulties. Patience is the level of endurance one’s character can take before negativity. It is also used to refer to the character trait of being steadfast. Antonyms include hastiness and impetuousness.
In evolutionary psychology and in cognitive neuroscience, patience is studied as a decision-making problem, involving the choice of either a small reward in the short term, or a more valuable reward in the long term. When given a choice, all animals, humans included, are inclined to favour short term rewards over long term rewards. This is despite the often greater benefits associated with long term rewards.
Patience to wait for the right time to re-enter the trade. Wait for each bar to finish when trying to re-enter.
Patience is a protection for your assets:
“Patience serves as a protection against wrongs as clothes do against cold. For if you put on more clothes as the cold increases, it will have no power to hurt you. So in like manner you must grow in patience when you meet with great wrongs, and they will be powerless to vex your mind.”
Leonardo Da Vinci
Practice and improve patience:
“Patience can’t be acquired overnight. It is just like building up a muscle. Every day you need to work on it.”
If you think there is no clear signal, walk away. WALK AWAY! WALK THE FUCKING AWAY! If you trade with a chance of 50% and it goes well. In the long run, you are building the wrong kind of habit. And that would kill you later on. What you want to do is develop the trait of patience. Walking away and not looking back if the chances are 50%, 60% or even 70%. You want to be sure to profit. Protect your assets and money. Trade only when you are 100% sure that you will win. A sure bet that you can risk all your assets on a single roll of the dice. Waiting for the perfect moment to strike. That’s how wars are won. That how you will win in trading.
“He that can have patience, can have what he will.”
Build the habit of patience. Improve your patience. Practice patience.
“Have patience with all things, but chiefly have patience with yourself. Do not lose courage in considering you own imperfections but instantly set about remedying them – every day begin the task anew.”
St. Francis de Sales