Off on a bit of a tangent here, but it’s a subject which interests me a lot; how can my management of a trading position vary so much almost from day to day, despite the fact that my ‘technical’ knowledge doesn’t really vary.
Being somewhat of an avid golfer, it’s strange how some days (very infrequent) I can get into a ‘zone’ where I make excellent decisions, stay relaxed, and end up staying out of my own way and shooting a good score. The majority of the time, try as I might, I simply cannot find the zone again.
Trading is exactly the same for me. Trades which I get wrong do not interest me, I forget about them immediately and move on. What does interest me is being able to maximise profits from the trades where I’m right. This involves picking the correct entry levels, booking interim profits along the way, trading the swings and building a strong core position, and most importantly having a good-sized position when the market makes a significant move in my favour.
Unfortunately most of these decisions are emotive ones, dependent on what’s happening in the market at any particular time. When I’m relaxed and confident, and not over analysing the situation, I invariably end up making excellent decisions and maximising my profits. When I get in the way, I usually stuff it up.
