How to learn from trading mistakes

Three weeks ago was a good trading week. Two weeks ago I tried to catch a ‘falling knife’ (a no-no in trading. But, again… hindsight). And then this week we almost made back for the falling knife thing.

The old trading saying is ‘don’t try to catch a falling knife, wait until it sticks into the floor and all the wobbles stop’. Well, I know this, but when we don’t see it as a falling knife but rather as an extension of a wedge we feel correct in taking it. It’s only soon afterwards that we realise that it’s an oops trade.

Okay, I’m starting to lose you in the terms. The thing for me to get from this is that I can learn from it. I take responsibility and I take the lesson. Last week we had a couple more falling knives, one of which I ignored as couldn’t get a traders equation trade from it, and another I took correctly for a profit.

How did I get around my error? By back testing. I simplified by going back to a maximum of 120 bars on the main screen and that has worked an absolute treat.

Okay, inevitably these trading lessons happen from time to time, to all traders. ‘Take responsibility, embrace the lesson and come out stronger’…  that’s what I said to myself, and it worked. The wrong way would have been to ignore the lesson, trade more and try too hard to immediately make amends.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s