Times Discussion

Weekend Review: January 24 was the first day with a drawdown. Why did the day end negative? Below, I discuss the possible causes and remedial steps.

The biggest loss was 35 pips even though losses were not supposed to exceed 20 pips. I identified the reason to be operating with a mental stop loss, which was flawed since price spikes can travel several pips within seconds. To prevent any recurrence every trade will now come with a hard stop-loss and I have pre-set the loss limit at 18 pips (in effect since January 25).

The 46 pip win was a pyrrhic victory. Even though the trade came with minimized risk, I had to stare at the chart for 9+ hours and that was an ordeal I wouldn’t like to repeat. A good trade should be one that comes with minimal risk and turns a decent profit in a short while. At some point the trade was up by 70+ pips and I was thinking it will hit 100. That was an error since this is a short term system and my focus would be to take multiple short wins and pile them up while restricting losses. It is good lesson though because when I started out and had the 2 hour limit for a trade, I was thinking primarily about losing trades not winning ones. To keep in tune with the system every trade will now come with a pre-set 18 pip take-profit limit and I would bail out if it isn’t hit within the 2 hour limit without waiting for the win to get bigger.