If you follow our blog, then you are definitely familiar with trader Larry Levin, President of Trading Advantage LLC. We have gotten such a great response from some of his past posts that he has agreed to share one more of his favorite trading tips as a special treat to our viewers. Determining the direction of the market can be tricky and just plain confusing at times, but Larry’s expert opinion keeps it simple.
If you like this article, Larry’s also agreed to give you free access to his weekly trading tip.
A friend of mine in the pit had been having a rough time of late when he asked me a typical question among us traders - How do I come back from a loss? Since he had been having a "rough patch" and not just one bad trade, I gave him the following advice that is to be used over a period of time.
First I asked him, "What does your trading journal look like - or maybe you don't have one?"
He didn't think it was necessary, which was his first mistake. It is critical to keep a trading journal.
In my journal I ask myself everyday "Did I follow my trading plan properly? Did I do anything wrong and if so, why?" If I did follow my plan correctly but I lost money, I am not hard on myself. Sometimes this happens! If I didn't follow my rules but still made money, however, that's a problem.
I highlight these days so I never repeat this fatal flaw. One of the worst things you can do is ignore your rules and make money, because then you feel that "winging it" is a good plan. It is not.
If this happens, you have to ask yourself; "Why didn't I follow my rules?" Was it lack of confidence in the system? Fear? Or did my ego want to be the hero that sold the high?" [Read more...]