Between February and April I hit a point where I was taking pretty consistent losses. In some cases I would lose because I was in the wrong stock and other cases I would be in the right stock but I would mismanage the opportunity. These problems seemed independent of one another to me, as such I took steps to deal with them.

I treated the issue of being in the wrong stock by watching Trader Checklist. As well as going through all my market statistics and saved charts and finding the commonalities. 

The way I treated the issue of mismanaging opportunity was to create a trading model for myself for active trading called the 3-share system. I ran my normal process to differentiate plays, when I found the plays I like I would only trade a maximum of 3 Shares.

Why only trade 3-shares of a stock? I took on the mindset that those 3-shares represented $10,000 worth of size. I put that pressure on myself. Each share represented what I would do wit 1/3 of a $10,000 position. I stopped thinking in terms of where I was and started thinking about what kind of choices I would make at every stage of trading regardless of size. 

When I first started doing this I thought that it was going to make me much looser with the positions I took, what I found was the opposite. Only using 3-shares and thinking of them as 1/3 of a $10,000 position made me much more careful than I thought. I think I have become too careful. I will often miss trades that have a decent chance of working. However, of the handful of trades I have taken (3 to be exact) I have a 66% Win rate. That is up from 25% just a few months ago. 

I think I took less trades on account of my pride. The talk that was in my head was "I don't want to trade this, lose and be wrong so I will watch". Only now do I realize that this kind of mindset got in the way of my trading. You need to be willing to push the buttons when things align. It erodes my confidence a little bit when I know I understood a situation and I stayed out because of my own self-talk and wanting to be right. Staying out of a play keeps your more objective than you otherwise might be. A future task of mine will be to learn how to treat plays as if I am not trading them, ultimate objectivity. 

Rule #5 is important here. Rule #5 is "Trading is a means to an end, not an end in itself". I think my relationship to trading is such that I want to be right all the time because I work so hard at it. But viewing it that way, going too far in the direction of conservative trading  makes you jumpy when the right trades come around. Seeing trading as a place to be right keeps you out of potential profit opportunities. I need to look at this for what it is, a means to an end, which is to be profitable; not an end in itself which is to be right.

Overall this system has taught me how to trade like a retired trader. I will do an update when I get to the sample size I desire.