Debugging a losing Streak!

Even if your startegy is sound and your discipline in tact, most traders eventually experience a losing streak. When this happens, it seems that most trades turn badly and nothing goes right. If this is the case, there are some methodes you can use to debug and correct the downslide. 

The first thing to remember is that trading results have nothing to do with “ luck” . While there are certainly events beyond control, for the most part, a series of losing trades will have some characteristic you overlooked, one or more errors you committed. If nothing els , you might have held losers too long or perhaps market conditions were so poor that you should not have been trading in the first place. 

The best method i have ever developed for debugging these problems is to do the following exercise. 

1. Go back and note your three most recent worst trades.
2. Study each of these trades looking at both intraday and the faily chart.
3. Noting your entry and exit points, discover what you overlooked. NOTE: There will always be somthing yoy overlooked, or some error that you made. You are not through with this exercise until you can articulate each and every item you missed when you made the trade. (Repeat this staps for each of your three worst trades) While you do this a likely discovery will be made: You will see that you keep making the same mistake!
4. Now you do the same with the three best trades.
5. Using the knowledge you gained from all steps above, adopt new firm policy to correct your mistakes and to strengthen what are doing right.

What is fascinating about this exercise is the discovery that keep repeating the same mistake. Conversely , your better trades will show the opposite somthing you keep doing right.  Even more interesting is that your " right" trades will often be the exact opposite of your worst trades.

For example, let's say when analyzing your top losing trades, you discover that all three of them got stoppend out too early, then each of them went on to soar. When analyzing the winning trades , you might notice taht you let them run a little wider, amd they took off without getting stoppend out. From this info, you adopt a new , firm policy to set your stops more realistically, giving the stock more room to maneuver.

The omportant thing is to discover what specific errors were made, and just as omportant, to discover what you did right. From this newly discovered infomation, adopt firm policy and self discipline to correct your mistakes, and just as important , to enchance waht you are already doing right.
To be continued (10-28-2020)

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