Because trading in a
disciplined manor is not easy when one has to cope with the
frustration of often seemingly random events, that the
paranoid trader may feel are
conspiring against them.
This includes things such as - you try shorting a breakout, it does not happen, your Stop is hit. You try to short the same breakout again, the breakout does not happen and your stop is hit again. The third time you decide not to trade the breakout - and the result is that if you had have traded it this time, you would have made profit.
Furthermore, if you had held onto either of the first two losing trades, without taking a stop-loss, they would have come back into profit when the eventual third breakout materialised.
This is frustrating, as it seems like
random pot luck determines if you placed your trade/s at the right or wrong moment, and to a large extent i think it is random Pot Luck - when it comes to what works and what doesn't work.
The trader can decide to trade the breakout every time their trade entry criteria is met, taking each and every stop-loss along the way, or they can stand aside after a few failed attempts, in order to avoid possible further losses, only to watch if and when the eventual breakout materialises.
The trader could also see that the breakout is occurring, enter the trade too late, and see the trade reverse against them resulting in another failed trade.
This type of
negative experience and frustration can also lead to
fear of failure. Therefore the trader may pass up on other types of good trade opportunities, only to see them move into profit - as they had foreseen, but were too scared to trade.
They may then hastily try to enter at a following entry opportunity that is not as good as the last, this trade fails. They may now be thinking, I should be +20 pipps in profit now, but instead I'm -10-pips!!! = more frustration.
Therefore the frustrated,
indisciplined and potentially
doomed trader may put up with such frustrations for so long before deciding, no,
I'm not accepting that my stop-loss has been hit this time, I'm going to hold onto the trade, and it should come back into profit just like the others.
The trader may get away with these indisciplined trade managements decisions (which they may only resort to on a few rare few instances) for so long.
However, somewhere down the line the trader will find that price moves further and further away from the stop-loss that they didn't take - and now wish they had took it - leading to them being deeper in the red, unable to trade due to this losing trade hanging over them.
At some point they may have to add more funds to their account following a margin call in order to keep this doomed trade alive, or they accept a big loss on that one trade. and they only have a small fraction of the capital left that they had previously.
Learning from such mistakes is important.
To learn from such mistakes, you first have to be able to remember these mistakes!
In order to help you learn from and remember the mistakes made, as an intraday trader, still in the ealy stages of trying to become successful, I am finding that keeping a real-time traders diary is beneficial. Over the last few weeks I have filled 59 pages of A4 with my real-time thoughts and lessons learned. If i had not been doing this, i would not have retained half as much insight as I feel I have. Hopefully, things will start to click into place soon.
Hopefully as I progress further, and my learning curve of the initial weeks starts to plateau, i will have less and less need to record things in my diary, as I will recognise what is happening, and what is likely to happen next quicker, and correct decisions become more like second nature. With learning to read, interpret and react appropriately to the market, being similar to learning to ride a bike without stabilisers.
The diary may seem a bit of a ball acher but its proving immensely valuable so far, as just writing down your thoughts, insight lessons learned, theories, etc. in full and in a systematic way, helps you retain this much better than if it had just been left as a passing thought.
It then helps further, if you re-read what you have recorded in your diary.
If i hadn't kept a diary, i fear that the last few weeks would just be one long blur - a missed opportunity to remember what I've learnt through recording it
Hopefully in the comings weeks, the diary will go on to provide documentation of the journey, and "distance travelled" from novice trader to market wizard
