Is she making too many trade decisions?


Riding into work today, I reviewed The Daily Report Card of a developing trader with this month’s goal of sizing.  Some might read her trade review and wonder: Is she making too many trade decisions?

Often you hear traders lament they need to hold their winners longer.  Or traders carp they should have given a trade a bigger stop.  As an active trading trading coach, I generally prefer a different approach for consistent trading.

I notice much better odds for active trading success when traders are able to make more decisions and still stay in the real trade.  Traders who can cut trades not as likely to work based on what they are seeing in markets.  Traders who can get out of a trade and then back in, after noticing the trade more likely to work.  Traders with the openmindedness and nimbleness to change their minds quickly about risk on and risk off.

This trader wrote (highlighted most important comments relative to this post),


goal this month: appropriate sizing

BXC- scratch trade. got started with a super small size to start getting a feel (Trade decision A) for how it traded, didn’t like how wide the spread was and how thin it was so never initiated an actual position and didn’t force a trade here so that was good.

CRIS- same as BXC; started with a tiny size but never saw a good setup (Trade decision B) to actually trade so just got out for scratch; again, good job of not forcing trades

NTNX- lost money but was actually pretty happy about this trade. saw a setup I really liked, saw weakness on the tape and started building a position for short. sized up to tier 3 risk, sized down on the bottom of the channel when there were clear support in the $50.80s (Trade decision C), and got out when my risk was hit.

I think my plan was good, had a clear level that I trusted to risk off of and I followed it.

The execution of my plan was pretty decent for the most part; the only thing I did outside of my plan was I covered part of my position near the top end of the range, just 2 cents below my risk, bc I was a bit scared at that point. recognized it after I got out so I got right back in (Trade decision D)….

Trade decision A- She starts small looking to make another trade decision to get bigger.

Trade decision B- She makes a trade decision not to get bigger, while looking to make another trade decision.

Trade decision C- She sized down, making a trade decision, in a trade she started with the intention to play for a big move.  I love the nuance here to this trade.  She will go for it if the trade is really working, but lighten up at technical support and if strength on the tape.  This is just excellent trading here.

Trade decision D- She exits because she feels potential slippage, thus making a trade decision.  I really like her protective decision-making here.  If you do not feel you can control your risk above your stop (slippage), better to exit and reevaluate and avoid a huge rip.  Then she gets right back in after feeling the risk of slippage is not what she feared.  She makes another trade decision.  This is an important active trading technique she is archiving of her real-time trading in this review.

Certainly, too many trade decisions harm performance for many.  Too few trade decisions thwart the progress of many developing traders.  How many trade decisions you will make inside your trading PlayBook is a large area of study for the new, developing and experienced traders.

*no relevant positions

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