I think I need to slow myself down, take the small wins when they present themselves and not get greedy. A situation I've been in many times before but it seems I'm still learning the same lessons. In fact, the more I think about it the more I realise that there's probably only a handful of trading lessons in total, only they rotate just as the last one gets forgotten.
This really struck a chord with me because I have thought this many times over the past 6 months or so. So what are these key trading lessons or rules? This is what I came up with:
1. Don't chase losses
2. Don't get greedy
3. Don't trade with amounts you can't afford to lose
4. Don't over-expose your bank on one trade
5. Don't cut winning trades short or let losing trades run
6. Don't get involved unless there's value
7. Don't trade when in the wrong frame of mind
I honestly cannot think of any aspect of trading that will not fit into these 7 categories (let me know if you think of any more!). Whenever we make mistakes, it's always down to one of these 7 issues (some of which over-lap a little e.g. chasing losses can lead to over-exposing your bank) and as Mark points out, you can often feel as though you've combated one of them but a few weeks or months later, it rears its ugly head again. It can feel like an endless cycle of trying not to slip back into bad old habits but in my opinion, there is only one way out of that cycle - work harder.
What I've found is, the more effort I put into analysing the root cause of each error and then finding new techniques to work on each cause, the more success I have at preventing those errors. The more I practiced and experienced each situation, the more I got better at dealing with these trading lessons. I'm not for one minute saying I've eradicated these problems but that in itself, is one trading lesson I've come to learn and accept above all else - you will NEVER eradicate all of those errors. I think the very best traders simply catch those errors earlier, deal with them more calmly and experience them much less.
I would hazard a guess that number 3 and 4 would probably be the only ones that a top trader will completely cease from doing. All the others I reckon almost everyone will continue to slip up on every now and then. The difference being, whilst it may have happened regularly at the beginning, it will maybe only be an issue a couple times a month or even a few times a year.
Currently, I would say number 5 has been the issue I've been struggling with most, especially getting those greens to run for longer. This eventually led directly to another of the trading lessons - number 2, greed. The previous week, I decided to go for more money, larger greens, by letting all my entry trades run through to conclusion. As you may remember, I wrote that this destroyed my excellent January with 14 straight reds! Had I not been greedy and traded as normal, I would have almost certainly achieved my best ever month of tennis trading. Law of the Sod.
More on this subject tomorrow.
OFF-COURT BEAUTY: World number 9, Na Li / Li Na of China: