Thursday, March 27, 2008

Trading Boils Down to Three Things

1. Choosing high probability entry points to trades (and executing them well).

2. Getting out of losing trades fast.

3. Hanging on to winning trades for as long as possible (but not letting them turn into losers).

During my poor performance in the second half of 2007 my main problem was failing to do 2. By paper trading I seem to have trained myself to be pretty disciplined now in getting out of losing trades. Sometimes I'm setting stops too tight - especially with the Australian Share Price Index futures contract. So I'm working on that. Recently my problems have been more areas 1 and 3 - especially 3. I've been jumping out of winning trades after only a fraction of the move has occurred. And I've been either too impatient to get into trades or waited too long to get into trades. So I'm working on those things too. At the moment I'm up for the month and the year (a little) in terms of realized gains. It's a nice change.


LiggerPig said...

Hi mOOm,
Update your EW count, you'll be to able to plan for a good position you can stick with, and it's coming soon ;)
Have fun,

mOOm said...

Yes, I think the ABC correction that started last July is complete and have increased my stock exposure a lot in the last couple of weeks. It's possible that this was just the first wave of a longer bear market. But I believe it is up for now.... We'll see pretty soon if I'm wrong :)