Looking back over the trades on my blog, I notice that the best trades were ones where the market went my way right away, and where I waited for a good entry point. Several bad ones have been bad because the stop has been to tight — the market has gone my way, but not before hitting the stop. This leads me to think that I should be more active and more risk-averse about getting into positions. Specifically, I should identify trades in the morning and then watch the market through the day to get in at local maxima or minima. Soon after trading, if the market moves in my direction, I should move the stop to lock in no loss on the trade. If the market comes back and makes a lower low or higher high intra-day, I will be stopped out but can always get back in — with a clear head, since I won’t have had a loss. This is harder work in terms of managing entries and trades, but should skew the odds more in my favour. I would hope to move the majority of losers into “neutrals”, i.e. trades exited at no cost (because I pay a spread but no commission, exiting at the entry level means the trade has cost nothing).
This may seem rather defeatist — I should be able to take the pain of the market going against me for a while. But I know after almost three months that I can do that, and that I can let profits run. What I haven’t yet done is kept the number of losers low relative to the number of winners. This should now be my number-one priority.