Monday, April 30, 2007
learning from mistakes and moving on
April 24, 2007
A client of mine asks me the following question ...
"When should a trader know when to say it is enough and I need to get out of the position. More importantly, how do you find a balance between learning from a mistake and not being weighed down by it on your next trading decision."
Here was my advice:
* if you have "edge" in a trade, then winning or losing on a trade will be determined long before you find out the outcome (profit/loss) on the trade.
* important to focus on the process of the trade... making ONLY high quality trades
* your job as a trader is not to determine or decide how much you make or lose...that is up to the market. Your job is to put on trades with "edge."
as far as not being weighed down by the mistakes, my suggestion is to begin a "lessons learned" spreadsheet where you document mistakes you make and the lesson you learned from it.
I also suggest you start a qualitative trading journal that way you can get the emotions out of your head and onto the paper.
this will help you move past your barriers and get some closure on them so you can be focused on the next trade.