Saturday, December 29, 2012
Trading Psychology
The past 2 months is a great example of how a bad mindset can affect your trading results.
My equity curve plummeted in Nov and Dec 2012 because I shifted my focus on trading set ups to trading for money. Because I wanted so badly to make 1000% return a month (after observing how so many people do it on Demo Competition, I wanted it as well), I over-traded, and lost sight of my money management rules. Initially, it didn't occur to me that in order to gain 1000% return a month, my level of risk will be OTT (over-the-top). Only hit me when my DD hit 70%.
After the whole fiasco, I accepted the fact that my method of trading will not bring me 1000% a month. Even if it is possible, it means that my risk will be extremely high.
My trading method can give me 1 - 2 good set ups per day. Because I only have 1 - 2 good opportunities, I have to wait for the trade with the highest probability.
Well, at least now, I have been profitable in the past 2 weeks. It is not difficult to be profitable, I figured, when one focuses on trading the best set ups, stick to a sound money management plan, and stop expecting to make 1000% a month.
My equity curve plummeted in Nov and Dec 2012 because I shifted my focus on trading set ups to trading for money. Because I wanted so badly to make 1000% return a month (after observing how so many people do it on Demo Competition, I wanted it as well), I over-traded, and lost sight of my money management rules. Initially, it didn't occur to me that in order to gain 1000% return a month, my level of risk will be OTT (over-the-top). Only hit me when my DD hit 70%.
After the whole fiasco, I accepted the fact that my method of trading will not bring me 1000% a month. Even if it is possible, it means that my risk will be extremely high.
My trading method can give me 1 - 2 good set ups per day. Because I only have 1 - 2 good opportunities, I have to wait for the trade with the highest probability.
Well, at least now, I have been profitable in the past 2 weeks. It is not difficult to be profitable, I figured, when one focuses on trading the best set ups, stick to a sound money management plan, and stop expecting to make 1000% a month.
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