Hey everyone, what a nice start November has gotten off to!

 

I had a rough September and October in my trading. In August I felt like I was finally starting to figure this out and thought I was about to make my way to profitability. Boy did the market have other plans. This past week however, I finally felt incredibly calm during my trades. I was able to accept missing trades which has been arguably my biggest hurdle and hopefully I can continue to defeat that emotion. 

 

This is what I was doing wrong in September/October and what I have changed with my mindset to begin November and also the ticker that gave me this mindset change and positive results this week:

 

September/October

Overconfidence, Impatience, Frustration:

I didnt have a relatively great August but for me it was much better than my previous months. It was a profitable month and I felt like I was getting a grasp of the basics of trading since beginning in February. Then September and October came and I starting getting a bit reckless. I was forcing bad trades by chasing, not looking for good setups but just getting in a trade with a poor risk/reward and going in with bigger size than I should have been. The one thing I did right was trading with a tight risk so that my losses were very small. This problem was that  I took so many small losses in these months. I would enter a trade with  an illogical risk/reward and tell myself that it was a good risk/reward because I was setting my risk at a level that would be a small loss but it wouldnt be a level that related to the chart so it didnt make sense. I was also getting annoyed that it has been taking me so long to figure this out and I just wanted to get back to breakeven. I forgot that this is a marathon not a sprint and success in trading will take time. Although I was profitable in August, I still had many emotions while in trades and I was basically just profitable thanks to 1 or 2 trades. I had still been overtrading and that continued in September and October as well.

Then $VRX happened. The Citron Research report came out on $VRX and I shorted it at $128/share and covered at $121/share for about a $120 profit. Then it dropped to $105/share and got halted. I was annoyed that I missed out on an extra $16/share of profit so I entered short when the stock re opened at about $105/share and then it started flying upwards. I had all sorts of emotions and thought "this stock was just at 1$40/share, if it gets back up there I'll have a HUGE loss so I cut the trade at $117/share for a $240 loss which was my largest loss so far and wiping away my earlier gain. 

The lesson I learned and probably the best loss I've had so far:

Don't trade anything that you're not familiar with regardless of the opportunity. If you profit, you will enforce bad habits and you'll lose more than you'll win in the long run. Master 1 setup at a time and focus on those setups only! Sure there was much more opportunity with $VRX in the following days but I learned my lesson. I paid no attention to it no matter what was being said in the chatroom because guess what: there was no clear setup FOR ME that I was comfortable with and way higher priced than anything Ive ever traded.

 

November (so far)

Patience, Calm Trading, High win %:

So I finally decided to slow it down and take it one trade at a time. I decided just to focus on going long for now because after reviewing my trades, most of my losses were from going short and I decided to just try to master 1 setup at a time. So this week I had 11 trades all with very small size to test this out. All 11 trades were long and i was 8/11. Also it was a profitable week. The $ amount does not matter to me as it had in the past. I need to learn how to trade before I can make money. Making a lot of money won't do me any good if I don't learn anything because I'll just lose it all so I need to trade small and become CONSISTENT. This was a big week for me. The main reason it was so big was because I was incredibly calm during my trades. I made a plan before entering the trade and I executed on that plan and did't look back at what could have been. I let many trades pass by without feeling an urge to jump in if I believed I had missed the opportunity to enter and moved on to the next potential play.

My average winning percentage was around 30-40% each week beforehand. This week after this change in mind set it was 72% and gave me a huge boost in confidence. I will continue to trade small in November and my goal is to earn $50 a day by looking for good setups and get back to breakeven before the start of 2016.

 

The best thing Ive done this whole time is keep trading small and keeping my losses small to stay in the game. 

 

Become consistent first, then the profits will follow. 

 

Hope this helps!

 

Thanks

 

Vikram Bansal