copyright roblox
intro
Recently I posted a GBPUSD short I exited prior to NFP, I had the option to tighten and lighten but with the pending volatility and the trade just nudging break even it just didn't seem worth the risk/gamble.
Now what is interesting is that all the more experienced traders I spoke to were fine with me killing the trade but first recommended keeping it. Kevin of Forexiation was particularly insightful. He treats "major news as a "50/50"... (If) I have a trade open just before a news event and can win a reward of +1R or over at the current price, then I'll usually stay in it, mathematically, if you have a 50% chance of winning anything over 1R reward, it's a good bet... If I only stand to win a reward of less than 1R, then I might close the trade or move my SL to breakeven. (while if I am already a good way to my target, 75%ish) I would probably... close the trade before the news as I have a 50% chance of winning (25%), or 50% chance of losing (75%)."
Now getting back to topic, in the lead up to making this decision I had experienced a bit of what I shall call "gambler's hope" which caused me some concern. What I mean by this was "ooooh, that data might really hurt my trade!... but maybe the data will push the trade my way?"
...and shall we say risk management: If we are exceeding either one of our money or risk management principles we are very easily going to lose our edge!
TTP Action: This is already accounted for in the TTP, however if for some reason this is incorrect, I need to close trade immediately. Trying to correct an oversized position and maintain exits that are technically legitimate is very difficult.
Assuming that your method provides an edge on the market, it stands to reason if you are not following it, or pushing its principles you not working your edge.
TTP Action: Again already accounted for in the TTP, however if for some reason this is incorrect, I need to close trade immediately. I'm not trading my edge so I can't learn anything from the results as I have nothing to compare them to.
Perhaps a little harder to define. However if we assume you are respecting high and low season (leave in May and stay away) and that you have a some kind of filter to identify the best markets to invest your capital... If you find yourself trading in disregard to either of these your edge will certainly suffer.
TTP Actions: Again already accounted for in the TTP, however if for some reason this is incorrect I have 2 options. 1. If in low season I find myself trailing my stop, swap to target. 2. If however I find that I am trading a market/pair that does not meet my filter parameters, close immediately.
Speaking to some experienced traders they suggested I watch out for "Greed, fear, distraction. tiredness, boredom over trading ,focussing purely on the trade set up, not the big picture, overconfidence and revenge trading " to me these are all examples of a loss of objectivity, losing objectivity will dull our edge.
TTP Action: This has not yet been accounted for in my TTP and I wish to add... Once you start to feel emotions, try to recover objectivity by thinking of the trade in odds/probabilities, if this can not be achieved shortly after your acknowledgement then you should close the trade immediately.
going deeper
Now getting back to topic, in the lead up to making this decision I had experienced a bit of what I shall call "gambler's hope" which caused me some concern. What I mean by this was "ooooh, that data might really hurt my trade!... but maybe the data will push the trade my way?"
I'm not beating myself up, hope is not in itself awful, but it is an emotion and I find when I'm emotional it is far harder to be objective. Objectively speaking the trade may still have been valid as my trading friends suggested, however because I was emotional I was unable to see the truth, that it was a 50/50 event and act accordingly. This got me thinking...
what other ways can I be losing my edge?
This lead me to thinking about what my coach, Paul Wallace teaches. The 4Ms, Method, Money, Markets and Myself. He explains that the sweet spot is found when you get all these plates spinning. It occurred to me that if these are the areas to find an edge they will also be the places in which they are lost and should be accounted for in my tactical trading plan.
money
TTP Action: This is already accounted for in the TTP, however if for some reason this is incorrect, I need to close trade immediately. Trying to correct an oversized position and maintain exits that are technically legitimate is very difficult.
method
TTP Action: Again already accounted for in the TTP, however if for some reason this is incorrect, I need to close trade immediately. I'm not trading my edge so I can't learn anything from the results as I have nothing to compare them to.
markets
TTP Actions: Again already accounted for in the TTP, however if for some reason this is incorrect I have 2 options. 1. If in low season I find myself trailing my stop, swap to target. 2. If however I find that I am trading a market/pair that does not meet my filter parameters, close immediately.
myself
TTP Action: This has not yet been accounted for in my TTP and I wish to add... Once you start to feel emotions, try to recover objectivity by thinking of the trade in odds/probabilities, if this can not be achieved shortly after your acknowledgement then you should close the trade immediately.
No comments:
Post a Comment