Sharing details of my losing trades and the learning lessons. At least I admit I have losses. It feels like online everyone only wins in an industry where 90% lose. Hopefully this at least is content that a lot of people can relate to.
My first trade of the day was a great trade set up on the FTSE, check it out below. You will see the set up is bang on my rules but my loss was due to my emotions not my technical skills.
This entry was my bullish engulfing bar strategy which basically says, if on higher time frame the asset is in an overall uptrend, at the lower time frames you should enter when you get a bullish engulfing bar of a reasonably sized bearish bar just at or close to the 20 period moving average. Ideally the volume would be at least the level of bearish bar but better if higher. Well, that did happen and I entered the trade with the stop loss set a little bit below the preceding bearish bar.
It ripped and I was actually at a gain that was three times my risk amount. I seen the hammer candle at the top and ignored the wide range bearish elephant bar that completely engulfed it afterwards. This was where I should have exited at a profit. I didn't, we can see what happened afterwards.
My emotions got the better of me. I know what happened. This was a great trade and after a few losers recently I was willing this to be a big win and let it run and I was in a state of relief that I had a well set up winning trade. I was foolish. One area I am not great at is having clear rules in taking profits. My rule is to see if they will keep running and although that sometimes does happen, in this case, the technicals was telling me to cut the trade. So what will I do to learn from this? I will build in to my rules that if any trades get above 2.5 times the risk on the smaller time frames (below 15 minutes) I will not let them just run and force myself to take a minimum of 50% of the profits and put the stop loss to break even.
The next 2 trades to be very honest were utter disasters and were taken as revenge trades. The only upside was that I managed to tell myself to stop trading and walk away, which is what I did. I took a break and came back for the evening session.
The evening session was upon me. I had not 'reset' my emotions from the earlier trading. I had taken a continuation short trade on the NASDAQ. This indices had broken its bullish structure and I was looking for further continuation.
I was stopped out of this trade as you can see but my mistake was entering the trade before that one minute candle. What was I actually doing the one minute time frame it is horrific for me statistically. My rules tell me that the candle must close before I decide whether to enter the trade on the smaller time frame charts. I didn't.
The next trade again like the first trade of the day I had followed my rules and as you can see, post entry, the price action continued on this short to the downside.
The price did go about 2R in profit but I was maintaining my 2.5 risk profit rules. Unfortunately this price retraced but I maintained my position on basis that there was a lot of resistance ahead. I need to consider altering my strategy for the smaller time frames to adjust the exit rules (the ones I have are weak). I can add a rule that once the price action breaks the 20 period moving average ie breaking it to the opposite direction of the trade.
At the end of the session my net losses were partly covered by one winning trade but my win rate again was poor and that was because I haven't addressed my issues about taking dumb trades. A charity donation will now have to be given in relation to the value of the trades that were taken that were not within the rules as outlined in my consequences blog post. See my winning trades post if you want to see that debacle.
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