How do I know I’m in control?

I always mention day trading in terms of how I trade—no one wants to know the management bit. Last week, I said that managing my work trumps how I go about it. But that, in turn, bows to what is going on between my ears—the top idea in my mind.

In truth, everyone realises that I can’t profitably have one without the others over the longer term. It’s just that the ‘how’ tends to be more interesting. Jean-Francois Boucher puts it well in his chat with Etienne Crete. The getting in and the getting out are the easy parts. I also like how he mentions that trading is boring if you’re doing it right but not too dull. Charts are repetitive, with lots of the same every day occasionally thrown into turmoil.

Boucher has a reasonably distant safety stop-loss relative to his timeframe. A stop, as he mentions, that saves his account, not the trade. I do the same. Nearly all my transactions are manually rejected when they don’t work, but my safety stop is always in place, and I manually trail the safety stop in a winning trade.

I like to know what the value is versus the perception. In this regard, trading a currency pairing will be very foreign to an equity manager. Stocks and shares predominantly go up. Indeed most brokers only allow longs. In this regard, buy and hold is the way. Not so in currency pairings. With these, what is up anyway and to what? Price revisits the same level time after time. But this hope is dangerous too. It has been to me several times in the past. Okay, I get it a slow learner, but no different to many eventual profitable currency traders.

Over several days until mid this week, I’d traded light at no more than two lots per entry and added steadily to the fund. Then on a day of pure personal genius (cynicism), I traded my feelings rather than the chart with early anticipation of a market reversal—this has rarely worked in the past and certainly didn’t go favourably here. As a result, I dropped a thousand pounds. Not a lot in the big scheme of things, but I know it can quickly get away from me if I don’t halt and come back the following days with my head right.

I sorted my feelings, went back to basics and traded the two following mornings returning all the losses. It’s never about the profit. It’s always about working well. If I’m proficient, profits tend to look after themselves. Overall, not a big win week financially, but (correctly) bringing back a loss is very positive. It tells me I’m in control.

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