Why?
Winning isn’t the only issue when it comes to trading.
In fact, it’s only half the battle. Easily forgotten – but it is!
A recent Twitter Follower posted a question just about it, here’s the answer!
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Dangerous Trading Situations…
Almost daily I get emails, tweets and messages on Facebook describing a similar sequence of events. Generally, it goes like this…
- My trading knowledge has developed recently.
- I’ve found I can regularly win by X / Y / Z.
- But from time-to-time there’s a freak result that takes away most of my profit in one go.
If you can eradicate the third point, you’re onto a winner. Winning more isn’t always the answer.
Frequently the answer is just a few small tweaks. Maybe avoiding that race where you had the blowout… it’s hard to accept for some, but you can’t expect the same thing to work in every situation.
It’s a pretty dangerous situation to face as; not only does your ‘edge’ not fit in every market, but you need to actually accept it, and then act accordingly (avoid it, or change how you fit in significantly).
Facing Emotion
It’s no secret that many start off in the markets looking to ‘scalp’ the prices. It makes sense to aim for the low-hanging-fruit, right?
Of course, the only problem being; if you’re only taking 1-3 ticks profit on each trade you can’t afford to lose that much in order to profit over the longer term. Cue the first problem; being human.
We’ve all done it, but not too much hopefully. But it’s hard to accept when things don’t go your way, having money on the table makes it even harder. It’s a huge problem to remain disciplined in the face of emotion, but the market will reprimand you every time if you don’t. If you haven’t seen it already, this post about trading fears may open you’re eyes up a little further. If you’ve got a strong impulse in you to gamble it’s going to be harder. I’ve blogged about it many times over the years but it’s a very personal thing. Understanding yourself and being self-aware is a real bonus when it comes to trading, but ultimately it’s 100% down to the individual to stick with the plan. Otherwise you’ll always have that crazy losing spike to your results.
Uniqueness
Secondly, a common problem for new ‘scalpers’ is rocking up to every situation and treating it like the last. It’s not to say every race isn’t possible to have at least once successful scalp. It certainly is, especially if you’re strict with timing. But it’s not quite a broad as many treat it.
Each market is unique, with many variable’s to consider. As a scalper we want to make good use of the market turnover and liquidity, so if liquidity is low, it’s going to be harder. If you’re getting in a fluster with the whole win, win, win, big loss scenario just cut out the crap quality races. You won’t have so many markets to trade, but I’d expect the average result to be better – or at least less stressful to obtain.
Those ‘volatile’ markets I mention in the clip are always going to be the worst to scalp, especially without a strong opinion as to where the price may be headed. But then we’re into the realms of directional scalping, nothing like those lovely high-grade affairs that attract millions in a race and bring little price movement.
Related Article: Followers Q & A Video’s
2 thoughts on “Dangerous Trading Situations To AVOID”
Hi Caan
I am a Newbie trader, ive been working hard over the last six months trying to absorb as much information as I can,
I have found that I win,win win then walk in to a horrible loss (something you have spoken about),
I think for anyone looking to improve their trading, aside from all the things that contribute to sound technique, is knowing your self, excepting your short comings, never blaming others or the markets, the buck must always stop at your door.
For me it is lack of discipline, I can be chugging along nicely, making steady profits, then for no reason I will either do something reckless or find my self in a negative position just before the off , my rational side will be shouting close out, but the irrational side will often win out, going in play (unless planned) is the worst thing you can do, as I can testify.
Over all my trading is progressing, but I fully recognize if I cant get beyond this point, then there is not much hope.
The Battle continues.
P.S Thank you for your really helpful posts and videos, I will keep you undated on my progress.
When I read Charles Barrett’s post he is describing me absolutely. It’s the inner battles, the lack of discipline and the urge to punt out. I have been a punter for over fifty years and enjoyed it, I know the lessons but have not been able to learn them. Until now. I have been a bookmaker in the UK and Australia and failed because you cannot do both, it is suicidal to try to make a book and punt, I could never learn that lesson. I have been a member of Betfair since its inception and for a few years I have wanted to trade but the same problem of addiction has made it impossible. You cannot trade and punt, its an easy way to do your bank, and I have done many. However, listening to you Caan, and reading everything you put out I have turned the corner. Also reading the Adam Todd life story and his path to riches was inspirational and I advise anyone starting out to study it. I am now I trader, I think, and I have the discipline it takes. I put on my blinkers and just look at my Geeks Toy software and let it work for me. I don’t read form or listen to the radio, purely cold trading and it works for me. Good luck to you Caan and thank you, and good luck and success to everyone starting out.