The last post from Alex this week and I think he’s done a marvelous job. A huge thanks for stepping up to the plate. It’s not easy to put ones thoughts on paper sometimes, especially for a vast audience to read. God knows I struggle often enough and I can talk rubbish until the cows come home, so he’s done a great job as did Schubes before him. It’s been good getting a decent look at how others trade and seeing different thought processes and I’m going to keep the feature running, as long as I have enough victims willing contributors.
So here is Grasshoppers finale, but you can read back over his weeks work here.
And for the last day, let me ask the question: What is more important? To concentrate on making pips or making money?
In other words, is it more important to reach your goal in terms of pips in the bag because of some idealized notion of what the perfect trade should be, or is it more important to actually have a profitable trade?
Surprisingly, you can make the perfect trade and still not make any significant amount of money. That’s for the real beginners to figure out.
The answer is, of course, having a profitable trade is more important than being pissed off at not having reached some ideal amount of pips per trade.
To most traders this would seem obvious, but not so fast. It is a subtle question in the sense that it forces us to recognize what our minds really do focus on. Is our thought process aligned with our goals? Or do we think it is when in fact, perhaps even unconsciously, somewhere in the back of our minds, there is a small homunculus stealing precious mental energy away because it worries about the wrong thing?
Enter the trading plan and the trading journal. I hate journals and for a long time I was telling myself that I was above such menial endeavours, that the ‘great trader’ that I was didn’t need to waste time with such ridiculous devices. If it’s all up there, and if I can think it, then why the hell should I write it down?
I could not have been more wrong.
When you write it down, it becomes real–you help turn something merely floating in virtual thought space into something actual. The key is, of course, to have your wits about you and have your mind, especially the unconscious one, aligned with your financial goals, or no amount of scribbling will ever change red ink into black.
Here is a sample example of the format I use. I like to start off all my trading journal entries with the trading plan, so as to cement what is it I want today when I plonk myself down in front of the screen.
It seems obvious, but be realistic about it. And when you think you are, look at the goal and target(s) again, and then once more and honestly ask whether this is realistic given the implied volatility or lack thereof of the instrument(s) you plan on trading.
TRADING PLAN
Instrument:
Goal: make ???/USD –> Result: ???/USD (I put this here so that I am forced to glance over the trading plan again after all is said and done; a salubrious habit, especially after losing my shirt!)
Strategy;
Time frames for entry:
Time frames for exit:
Trade duration: Seconds? minutes? hours? days? weeks? months? years? (If you are thinking ‘years’, please give me some of your cash. Trust me.
)
SL: ??? pips
TP: ??? pips
Then comes the postmortem.
TRADE BREAKDOWN
USD/CHF:
EUR/USD:
…. and so on.
WHAT WENT WRONG
PROFIT: ???/instrument name ex.: 23,040/GBPUSD
LOSS: ????/GBPUSD
COMMISSIONS: ???
TOTAL: $???
PROBLEM
SOLUTION
Now, of course, if only I could find time to read the darn thing.
(No charts today. Not looking at anything, except… well OK, except Gold and the obvious potential for a retrace and reinstatement of longs. Wouldn’t call it ‘looking at’ as it is just a ‘set and forget’ order (short) with TP around 1,347.00. Anyways, words of warning about how dreadfully wrong I am on this trade always welcome.)
Cheers and Godspeed!
Let’s make some money and change the world
Farewell grasshopper
