Had a disastrous trade late on Friday and lost 75bps. Analysis to follow. Also, have been stopped out of the short AUD/NZD position.
I have been thinking about trading over the weekend, and I think the reason that I have not yet made any money, appart from inexperience, is that I do not have a system for taking profits. I have let several positions make me a profit, only to be stopped out at my original stop loss. Most trades will not be the beginning of big trends and I need a system that takes account of that. I have therefore come up with the following experimental trading rule:
As soon as you have made 2x initial risk on a trade, move the stop to the entry point to avoid a loss. At each multiple of risk thereafter, you have to move the stop closer (to a sensible technical level).
I felt like a real loser on Friday, and I think the experience was helpful. I do not feel too down, however. Since I started trading, I have lost a total of 5.1%, but my winners presently stand at 4.1%; this tells me that I am not doing everything wrong, and that my risk control has been quite good (compared to some of the folk in Market Wizards, which I am re-reading, whose early trading experiences involved deranged levels of risk). Also, my mother got married at the weekend, to an excellent man, and the wedding was one of the happiest I have been to. It’s hard to feel down about your trading when life is going well.