Thoughts and stories about my journey in the markets.
Friday, November 5, 2010
Have you found your edge yet?
Does it constantly happen to you that by the moment you enter a position the market almost immediately goes against you? You wait and wait and wait, all the trades you do mentally work to the tick, but when you pull the trigger... it doesn't work!
Have you ever entered a trade just to take a lot of heat and by the time you decide to leave it, market goes a good couple of points in your favor?
That drives you really mad, you want to "kill" the market, smash the keyboard to pieces, you can even hear an evil big "laugh" from the market at you...
You CAN change that, and you'll be laughing at the market! You need to have an edge that works most of the time to give you the confidence to pull the trigger each and every time that edge is presented to you. You do nothing until you have that kind of condition that "you know" it's your chance to make a profit, even if it's only a small one, a 2,3 or 4 points profit.
If you still haven't found your edge for profitable trading, try to find it out somehow, it's the only way to stay in this game, you need some tool that will allow you to confidently pull the trigger, when you find your edge, you will be able to think in advance and have a plan: - "if the market does that I'll do this", "if it closes here I'll jump in" and so on. Once you find an edge that works "most of the time" stick to it and only change it if you find another way that has proved to be better, that works more frequently.
Now, you need an edge that fits your personality, in my own case for instance, I need an edge that gives me a good earning ratio... I lost too much in the past, so to fit my personality I need something that "I'm sure" will give me at least 70% of winning trades. Last month, from more than 50 trades that I did, I was stopped out only 3 times, an amazing good rate indeed.
So, when you find a system that will allow you to sit and wait for the best setups you will start doing well, but ONLY TRADE when one of those setups are triggered, you have to be patient, otherwise you will take unplanned trades just to regret you did it. Remember: you trade to make money, to get a living from it, right?
A system that fits your personality is a system that you feel comfortable with, you know you will be stopped out sometimes and that MUST not bother you. Some people will not have any problem being stopped out on 90% of their trades, as far as the other 10% of the trades will cover all the losses and make them money, this system without any doubt is not for me, a prefer to take trades that will give me from 1 to 3 points but they will frequently happen, that's my way to trade, and you must find yours too.
Posted by @RenaTrader at 11:58 AM
Labels: edge, psychology, system, trading
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