If you are a LOSS making trader, Answer the below question to yourself Honestly.
What is the main Reason for Your Trading Loss.
Unable to Understand Market Trend as it moves from Sideways to Trending
Is it your system or strategy? You are not having the Right Strategy and Losing
You — By repeating the same mistakes again and again
As per my experience with trading over 12+ years and also talking with 1000’s of traders over a period of time my Understating is
Traders are often their own worst enemy. The simple reason being most of traders after doing a big loss will turn to charts and try to find there mistake, What I missed in catching this move, Should I apply more indicators or should i learn something new to catch big move etc. Readers can go back to thought process they went once they took big loss or missed a major rally.
It’s easier to look at charts and imagine what the market might do or find an excuse , compared to turning inward and engaging in self-examination to determine if any changes in your approach to trading is required.
A very simple exercise will make you understand this
Go back to your past traders highlight the trades where u made maximum loss. Analyze all the loss making trades, You will observe over a period of time you have repeated the same mistake again and again, Be It taking an impulsive trade, trying to find top or bottom. Not putting SL , Taking over sized position etc.
What would happen if you identified a recurring mistake? Would you do anything differently while trading as a result? Would you need or use some type of structure or process to assist you in not repeating the same mistake?
The only thing we actually have any control over is our behavior. The market will do what it will do. If one is truly interested in maximizing improving P&L, then a focus on not to repeat your mistake again. We may not be able to control our emotions, but we can learn to manage them.
Trading Journal is one of the tool which can help you in understanding your mistake and over a period of time not repeating them