Lessons Learned

I learned a lesson last night that I feel will be very valuable to me as I go through the process of becoming a successful trader. The set up was fairly wide, and the price was in the middle, so I decided to set up trades on both sides. I went and laid down for a while, and when I got up the market had switched to the short side. It wasn't all that far away from doing the trade, but kept going back and forth. I was tired so I decided to go to bed and get up in like an hour to check it. Well, 7:00 rolled around before I woke up. I went to check it and found the market had gone through my trade and reversed around 18 or so pips down. If I had been awake, I could have moved the stop down for a break-even trade. It reversed and went up and took out my stop for a 15 pip loss. Then it did something even worse. Within a minute, it went up, took out my long trade and reversed for another 15-pip loss.

Now all this happened starting around 5:00 or 5:30. and was done at 6:35. If I am going to do this, I need to start snoozing within earshot of the computer so I at least hear when my trade happens. When I am trading real, my platform has an alert that can sound an alarm or send an email or text message to me. That way I can even know when my trade goes to the 15-pip point to move the stop.

At least it's just a practice account - not real money. This is why it's a good idea to paper trade before you actually go to the real stuff. This has been my downfall in the past. I got the idea that a trading system absolutely worked, but didn't paper trade it, at least not as much as I needed to. The other thing is that I found out that even when I do bone-head moves like this, I'm only down 30 pips. At the minimum, that's $30. That's why I always to 15 pip stops and why I need at least $400to trade. Ideally, it would be $500, but if this is working in practice trading I don't think I'll have that much patience. That gives me 26 losers in a row before I'm broke. I'll guarantee I'd be going back to paper trading long before I got through that 26 losses. What I'm finding is most of these, or at least half of them, end up break-even, where I still make a buck. Last night's would have.

The other plus about this is I recognize that I no longer am making fear-based mistakes, and I don't think I will be when I determine this system works and I start trading using real money. At least they're not fear-based relating directly to the trades themselves. The only fear involved last night was thinking I might lose too much sleep, or that my wife will think I'm an idiot for staying up all night staring at those stupid charts.

For now, though, I am just going to have to stay near the computer so this sort of thing is much less likely to happen. I was thinking that I shouldn't put on both-side trades, but that would be ok as long as I don't go to bed on the other side of the house. And be willing to take the far-away one off if the price gets close to my entry, instead of waiting until it actually trips.

There! Lesson learned. Now to record this debacle, I put it as it happened in my trade log, and put it as it should have happened in my practice-goal spreadsheet. The whole thinking behind the second one is to see if this method actually works. I'm pretty sure it does, but it seems prudent to keep a running record of how these trades should go. That is, when I am responsible enough to manage them properly. It's also prudent, though to show how fallible I am and put safety precautions in for that. Granted, it is tough to stay up, but I can at least snooze, as long as I can hear the computer. Now I just have to hope that the program doesn't shut down, as it often does. With last night's activity in mind (the thing swung like 60 pips in a MINUTE! -after hardly moving for 3-4 hours) I am going to minimize the times I put on a dual-direction trade. And if it is close at all, I need to at least look at it every 15-30 minutes, depending how close the price is to my entry point.