The challenge begins

I've finally cleared out my CMC markets account and started actively recording and properly managing the PnL of all the traders that place. Sounds like something any normal trader would do by the very nature of his/ her job, easily churning off portfolio holdings, NAV and total profit/loss to date. Not me! Like most I am sure I have always focused on emphasising the gains and not the losses, the good trades and not the bad etc. Consequently, I have lost over £1000 to date. That total was more like £3000 only back in September until finally the penny dropped and I started investing in a little bit more effort to my trading approach.

At that time my friends would hear me boast of £2000 in a day profits with an account size of approx £3000. This is obviously an incredible return but what i failed to mention is that the following day i would lose £2100 and then another £400 the next and so on.... I fell into the trap that Warren Buffett would refer to as being concerned about my "outer scorecard" - or frankly caring too much about saving face and walking round like I was some kind of master trader everytime I made a win (quickly forgetting the losses prior to it!)... i think most people would actually just call it arrogance to be frank!

I have finally reached the point where I understand the mindset and I can't tolerate the losses anymore. I see it written time and time again and its taken 2 years to drill it into me, "cut your losses quickly and let your profits run" . It is so much harder than you think!

A blanket strategy is the best way to do this I think. The simplest approach that I can recommend is that of Robbie Burns (I just read his book "the naked trader" which is fantastic by the way if you want a great starter book on trading to read). He simply sets his stops at 10% below his entry price and then moves his stops to break even, break even + 5% and so on....

Interestingly enough he does not concern himsekf with looking for resistance pockets at these points and yet seems to consistentky bank on his trades. I am going to look at this approach further... I'm lazy an what's the point in stressing out if you can make money the easy way?

Happy Trading!