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A couple of weeks ago I noticed that there were some very specific bad habits beginning to frequently occur as I was trading. Each time these habits would come up I would think “Wow that was stupid, I definitely won’t do that again.” Then guess what, I did those things again, and again, and again.

So I decided that I needed to take some time to dissect these specific issues and find out why I kept repeating these mistakes. It has been really beneficial, and I plan to do the same thing with any recurring bad habits in the future. This is what I wrote.

 

The Issue

After seeing considerable profit in a trade, I tend to ride it negative. I have caught myself doing this fairly frequently. This happens due to the overconfident belief that price will go where I expect it to go. Most of this journal entry is written from the perspective of being in a trade, so most of the following observations apply to my mindset while in a trade.

 

Why does this happen?

A) I believe that price “has to” go places.

B) I stick to bias too rigidly, failing to take in new information.

C) I look at obstacles as “springboards.”

D) I tend to forget that breaths are normally larger than anything I want to ride through.

E) I stay in trades too long in hope of eventual profit due to the fact that I am limiting my trades.

F) I get greedy. After seeing a decent profit, often times 10-20 pips, I still expect more.

G) I am too excited to think logically.

 

A) Belief that price “has to” go somewhere

Price does no have to go anywhere. I can call directional bias, and set a profit target, but more often than not, price does not go all the way there. And if it does, most of the time it does not go straight there. Movement is only semi predictable.

To help with this issue I think that I need to remember that I don’t need to get all of the pips all of the time, anytime the market moves. Even in a predictable and unsurprising profit release it should be my goal to grab some pips out of the middle, maybe catching one of the two ends of the move, but I should never expect to get every last pip. To reinforce this, I should remind myself that 10 pips is a good trade. 10 pips is 25% of my current weekly goal. That’s not bad for one trade, yet often times I find myself turning up my nose at these profits, expecting more, and believing that I will get more.

One thing that I am realizing is that I need to treat my profit targets more like a maximum. I tend to just think that price will go to my target, and that’s that. So instead of saying, “there’s my target, that’s where price is going and I’m staying in this trade until it gets there,” I should be saying, “I could see price possibly going here, so I will stop myself just before there if price were to go that far in my favor.”

 

B) Sticking to bias too rigidly

This is almost the same as issue A, and the many of the same fixes apply. I need to be open to new info. I also feel like I need to feel the market to some degree. When price is moving strong in a direction and then it slows or stalls, it may not be a bad idea to get out with some profit. Usually I will find some content to back this up, often times though it is found after the fact. My point is that I should pay attention to stalling in price and look for clues as to why it may be stalling, instead of sticking to bias or belief that may not be true.  I always need to be looking for clues while in trades.

 

C) Looking at obstacles as “springboards”

Frankly, this issue is just dumb, but it is something that I have caught myself thinking.  Sure sometimes things such as dots or average prices will cause a slowing or some kind of rotation but to think that this will be followed by an acceleration in the original direction is just unfounded. It is purely imagination. I suppose where this came from in my mind is the fact that liquidity lines can fuel price movement, which, as I have learned, does not apply to dots or average prices in the same way.

To fix this issue, I should be treating obstacles as obstacles, and not imagining a magical propulsion of price in as a result of them. Perhaps instead I should imagine price rotating off of them into a breath, whereupon I would be stopped out with -20. This is a good scenario to remind myself of the reality of what may actually happen. I know this reality because I’ve been there and done that, and it ain’t fun and it sure ain’t cool.

I should also be looking at these obstacles as targets (maximums). Instead of setting a target far away on the other side of prominent dots or average price lines, perhaps I can use these points of interest as targets, or just play it by ear and watch closely how price reacts to them. This ties into what I said in the last section about feeling the market. Basically, if I see some funky stuff about to go down, maybe I should just get out of the trade, especially if I’m up in the trade.