While reviewing my performance over that past couple of days I noticed something which was surprising. Recently I have been preparing to take my $1,000,000 prop trading test So I have been trading on different assets trying to refamiliarize myself with the markets after a short break. I had been trading on afew currency pairs including GBPJPY. On this day I had recently had a big win of 2.5% of my account in a single day, Meaning that If I was to pass my prop firm trading test I would have made $25,000 in a couple hours. For some individuals this may be normal or expected, but for me, coming from small towns and villages i've never known anyone whose achieved anything similar. Obviously I was excited. Even though the profits weren't real the possibility and potential definitely was.
If you yourself struggle with handling big wins I have written more about the topic and maybe some tools that will help as I know not everyone struggles with this. However I do think it important. Here is the link:
When looking through my trades after my big win I saw how my psychology affected me on multiple charts. For me after a big win I notice my behaviour change in certain ways including:
Supressing Trades (Not letting the trade run, The frantic activity of opening and rapidly closing trades )
Taking trades which don't align with my trading Strategy, Styles and Objectives.
Below is an example
Figure A
Whats important in this chart is the arrows.
-Red arrows represent trades I've placed where I lost
-Orange represent what I call ineffective trades, Trades that have some kind of error with them such as not being held long enough or a bad entry etc.
-Purple arrows are missed opportunities. Trading opportunities that I should have seen but didn't
Here I have 2 losing trades, 3 ineffective trades and 1 massive missed opportunity.
My style of trading evolves around major areas of support and aiming to get the best price for the asset as it forms up by(Begins to react or not react) these levels of support and resistance. In essence I treat trading similar to the old stock market proverb of buy low and sell high. When Price has done down its and opportunity to buy not sell. It sound simple but until I implemented it into my trading I was taking regular and consistent losses.
If you analyse figure A it shows one major missed opportunity For around a 3.5 risk to reward which would have made me around 1.3% or $13,000. Instead due to inefficient trades and losses I was down 0.4% on this currency pair.
Reviewing other currency pairs I noticed a similar pattern.
All in all from ineffective trades and Missed Opportunities alone I had around 7% or $70,000 of my account size in unrealised gains and I had lost around 3% of my account by suppressing trades and Stupid Losses. All in All I have just broken even which when put into perspective that I should be atleast 5% up is disappointing.
But thats what trading is about. Learning from your mistakes, constantly improving and refining and mastering your strategy and developing your skillsets so that you can constantly profit from the markets for the rest of your life.
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