My Trading Mistakes : Part One

Dear All,

Its been 15 years in this market , in these 15 years I have experienced Bull markets and Bear Markets also ,And here I stand today with collection of my trading mistakes 

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Mostly no body want to talk about their mistakes in life as same applies to trading as well.

As if people want to show off themselves as perfect human being  and perfect trader who mostly make money , but in reality as  you know is not the case .

I will write series of article to share with you my trading  mistakes and how I fought with them or tried to minimize them in my trading endevour .So let get started

One of the unique thing in trading and in life also ,when we commit a mistake , we don’t realize it until the result of that mistake is in front of us.

One of the first  mistake I realize in my trading was , that I dnt have a “ written trading plan “

Its secondry that wether your trading plan will be successful or not , you need to have a written trading plan . As it will provide you clear goals , that you can focus on .

If you take trading as a game , then like most professional sport person you need to have a game plan.
 For ex. , In  Cricket  , Team combination will depend on the Pitch and environmental conditions .

If you take trading as a war , then as a warrior / soldier you need to have a plan how you will combact in real war situations .

With a trading plan its like traveling without  any particular destination in mind , ultimately you won’t reach where u want to be .

Now what exactly a Written Trading Plan should consist .  Just to share my perspective I guess these are few points which need to be addressed before you even think of putting up a single trade .

1.Why Trading ......... Have you ever asked yourself why you want to trade ??

2. Your Style of Trading .... Positional / Swing / Intra day ??

3.What's your Edge in Trading ???

4.How much time you devote In studying Markets ??

5.Have you define which markets will you trade ???

6.On what basis you decide to enter into a trade ???

7.Exit criteria ??

8. Money Management rules ??

9. Position sizing ???

These were  few points that you should consider while making a trading plan .

Now why I consider not having a trading plan as mistakes and how it transformed my trading result when I had one .I  learned Technical analysis by myself , then after learning technicals and with few good  money making trades , I started thinking as if I can make profit very easily , but later on market taught me a hard lesson.

I started as a intra day and swing trader , and use to combine diff technical studies to take trades and was trading every day , trying to capture every swing of the market , rather focusing on main trend , I was just trading and quite late I realize that I am just not making enough money inspite giving my whole time to trading , I was just making brokerage for my broker and at times I suffered huge lossess .

The problem is  their was no direction , what exactly I want to achieve from trading , please note money is by product of trading , emotions tends to take over me , the moment any position start going my way I start thinking that by end of this trade I will make 20k or 50k depending on my position size and then when all of a sudden when position get against me I had no clue.

Iwas Making Money then giving up , was not prepared to take it , even after putting my best efforts things were not working .this continued for few days and I realize that we need to have a whole set of trading plan which can guide you right from very beginning what you  want to achive.

How trading plan help me in overcoming my mistakes , my trading plan given me specific goals , like when not to trade , how to handle winning position and how to handle loosing one , please note this will come after great amount of losses and hardship  , so be prepared for that .

Please note trading plan will evolve as you spend time trading with it , when I started 15 years back trading , I am complete different trader now , Now I Trade positional trades only max 10 trades or ideally 4-5 trades in a month .

Its hardly matter wether u trade intra / swing or positional , but to  know what style you trade is very imp ,Its like self awakening ,  knowing which direction you need to go .

The most imp thing , no matter how good you make your trading plan , u need discipline to follow it , ys evolution of trading plan will happen , but don’t hop around different methods frequently .

Before you start Trading you need to ask yourself , why u want to trade , you will surprise to know the answer will change every thing in trading equation .

Lets say I am having a job and want to have a secondry income source , since I am having a full time job , active trading style intra and swing will not suit me , as they require continous terminal viewing .So best for you is to do positional trades , if you will try intra and swing , your main job will start getting affected .

Now if you want to do intra , please note its like driving formula one racing car , chances of losing all your capital are quite high , as you will be againt those players who use high frequency robotics models to trade with . trading intra is  a full time occupation , you need to prepare really well .

You need to write every single point that affects your trading and then make a detail trading plan addressing every aspect of trading .

My simple mssg  is, before you even put your single penny in market , please make a detail trading plan .And let it evolve through your experiences and mistakes .

Please note Trading is a journey very similar to life , learn adapt and then learn again from your mistakes .Hope my article will help you to avoid one of the mistake of not having a Trading Plan .

Rgds

Abhay Mehrotra

M : 9873511276