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Read some really great advice here. One thought I did not see covered is
the issue of giving back those profits. You didn't indicate (for the
exits missed by 1 tick) what the gain would have been, however a stop
adjustment may have been in order.
I trade the spoo in two modes: scalping mode where I have a profit
objective of just a few handles with stop loss and objective equidistant
from my entry, and trending mode where my objective is at least twice my
risk to stop loss. The former is straight forward - on entry fill place
the stop and exit orders and then cancel whichever order is not
executed. The later is discretionary as I adjust my stops based on price
patterns, however I have several general guidelines. First, my stop is
always adjusted to (at a minimum) cover costs when unrealized profit
reaches twice my original risk. Second, my stop loss, is at the earliest
opportunity (as soon as price pattern permits), reduced by half when
unrealized profit is equal to the original stop loss. Third, an exit
order which reaches the price objective but is not filled is counted as
an exit signal and the stop loss is adjusted to assure a minimum profit.
I think there are elements of value to both Ira's advice to keep trading
your system and Tim's advise to quit trading when you are having a bad
run. The rub is in the details. If your system is completely mechanical
and incorporates sound risk management, then I think Ira's advice is
correct ... you must not begin picking and choosing which trades you are
going to take because you no longer have a system. If your system/method
is discretionary, then Tim's advice to stop trading applies because the
problem may very well be psychological and require a mental adjustment.
One other technique which works when having a bad day is to reduce size.
This allows you to get back on track and rebuild confidence while
reducing account risk.
The one set of rules which must be obeyed one hundred percent of the
time without question is the set of rules intended to preserve your
ability to trade. These would include percentage of account risk per
trade (my own limit is 3%), placement of stop loss orders on entry, and
your no more trading following an 8 point loss in one day. If you find
that you are unable to obey your rules without question, you need to
have a very long talk with yourself on the subject of trading
discipline.
Earl
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