This series of short notes is to record down thoughts, skills, and any lessons that I have learned from day to day trading. I am not talking about Technical analysis. One can really learn TA by getting a good book, and practice, so nothing much to discuss here.
So, what did I learn recently?
Stop Monkey-ing around with Trailing stops in Forex trading. I know I will attract a number of attacks or debate over this topic. But wait.
I note down this because it suits my trading style. It doesn’t mean trail your stops is wrong. There is no right or wrong in trading, but only what works for you and what’s not.
I start to realize, what I really love to do is to take care about how bad /how much I will lose in a single trade instead of how much I am going to earn in a single trade.
Put in the stop, that’s it. I will either close my position at a profit target (which is pretty far away) or at a predefined time. It hurts me more when watching a huge profit run away from me because I got stopped out prematurely by trailing stop than accepting a predefined amount of loss.
I can’t nor anyone can predict where will the price go and how much space we need to give to the trade to fluctuate before continue gaining. So, it is extremely tough to design the right trailing stop techniques. It can be done, but I am not into that.
OK, that’s the lesson 1. Lesson for myself.