I was chatting with a veteran trading coach about a trader in drawdown. Is this drawdown part of her strategy or is she making it worse? Are you making things worse for your trading with your worst trades?
Veteran Trading Coach: I actually love how she fights so much. She never wants to admit defeat in a trade until she hits her max stop loss.
Me: That is not a good thing. How can we get her to start working on giving up when trades are not likely to work?
Veteran Trading Coach: But she makes a very convincing argument for why she should keep fighting on all her losing trades.
Me: So she suffers from confirmation bias and is a persuasive arguer?
Veteran Trading Coach: You are right. We need to start working on this with her.
I see this so much with the under-performing veteran market trader. They are wonderful at developing a thesis. But to be a sustaining consistently profitable trader you must combine thesis + price confirmation + news catalyst _ fight for price. And “conviction” is code for just trading a thesis and not overlaying variables needed for sustaining edge.
Often you can make significant progress if you review your work and eliminate trades that are not working and you can feel mid-trade are not worth the risk. Learning to just cut them can dramatically improve performance. On some trades better to accept Game Over.
Fighting on every trade until max stop loss is not a positive quality to possess as a trader.
You do not have to cut all of these trades. But think of them on a spectrum from not worth cutting to I should definitely cut. Are there some of these trades that you could cut? Start with the most obvious trades for which you should fold.
Save your buying power, intellectual capital, and emotional capital for the trades most likely to work. What a waste of energy fighting and sweating on positions that you should cut before max stop loss. Embrace Game over.
Game over can be a spring board to improved trading results for you.
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What is your “move on” trading rule?
* no relevant positions
