Opportunity Cost Lost

Moving your stop can cost you big money. There are those that may move their stop farther back thinking "The market will never hit my stop if I move it 20+ more pips." Then you have traders like me "I'll move BE and have a free trade." Can you see the problem with this type of trading?

Let's take the first one: "The market will never hit my stop if I move it 20+ more pips."
Really? No, REALLY? The market can do whatever she wants when she wants. A properly placed SL should never be touched after its set. You pick that area for a reason, stick with that reason because during live trading, nothing is going to change that will make you NEED to change your SL.

Ever hear of the SL Hunt? It happens, what do you think those wicks are? If you are the kind of trader that feels the need to move their SL farther back in the middle of a trade, the simple solution is to build in a 10-15 pip buffer or call me. I can give you may account number and you can wire the money you are about to lose to me. If your SL is 40 pips, make it 50, 55 and build THAT SL into your risk. I had to do that with my GBPCHF trade. I originally had a 90 pip SL and kept getting taken out by a pip or 2, I forgot to add broker spread. My new SL is 100 and that has allowed me to catch these 200, 300, 800 pip runs.

Yes a 100 pip SL is crazy I know, but I don't care when I'm going for 2:1+ returns. The SL to me doesn't matter if as long as my RR is what its suppose to be.

Now time for my biggest issue: "I'll move BE and have a free trade."
I think this comes from being over protective. My true rule on moving BE is to not do it until I'm up 2:1+. I tend to move BE around 50-60 pips which is only 1.25-1.5:1 which is way to soon. Once a month I tend to do this and get taken out by 1-2 pips, then it shoots to the moon. When I don't touch it, like I'm suppose to, I can catch 150-1000 pip runs out of the Eurusd pretty easily.

So what is my problem? My wife always says "Leave it alone. You spent years studying that trade, and you continue to make the same mistakes. Your a great trader, LEAVE IT!" Of course I don't like being told what to do, I'm a stubbon Boricua, but @tradercisco tells me the same thing when I make the same mistake. Granted I have been getting better with this, but I think I am still guilty of doing this at least once a month. This for me is one the the last things that I personally have to work on.

This week I missed out on catching the eurusd long from the 3466 entry that went and paid 200+ pips. 5.5:1 return that I missed = an Opportunity Cost Lost that was huge because the next two eurusd trades failed. Had I caught my trade and not moved BE to soon, I would have had plenty of money and pips to cover the two losing trades. 72 pips lost-200 pip gain=128 pips or 3.5:1 RR. Time's that by 2% risk and I would be sitting pretty with about 7% gain. But NOOOOO, I had to mess with my trade and am -4%. I always say lesson learned and this time I will never forget this trade. (Yes I say that all the time too).

You see where I'm going with this? As @nictrades said in her interview: "Your stop is where your trade fails." So why would you moved your stop farther against you, or move it to soon. My trade mistakes cause me to fail, not necessarily losing money, but I didn't make any money and in my book that's worse then losing.

Opportunity Cost Lost is a big deal to me as I grow as a trader. If I am not aware of it and what I am doing, my account can and would go in the wrong direction. Thankfully with my journal I am able to see exactly what is going on with myself and correct what needs correct and build on the strengths that I do have. My patience is getting a lot better thanks to the egg timer, now the itchy SL finger needs to be adjusted. Time will tell.

Piptee

Journal for 2011

Journaling is one of those things that every trader must do, but the majority of us do not do. So for 2011 I have made it my goal to take pictures of every trade, before and after, and write something about the trade. What I learned, how/why the trade paid or failed, how I may have failed or succeeded, etc.

I am already seeing patterns in my trade and how I trade them. My flaws are sticking out like a sore thumb and its funny to see what I write about myself and how I can improve, then make the same mistake on the very next trade. Only to write the same thing I wrote for the previous trade.

"Do not move your stop. Take profits if you feel antsy or your patience is waning"

I need the teacher that will force me to write that sentence 50 times on the chalk board. I have written that above sentence about 3 times already this year, and I've only been in 7-8 trades so far.

"Your stop is where your trade fails." (Like we never heard that before)
"Only move your stop when you are up 2:1+ RR" (Can you tell I have an issue with my SL?)

That's just a few bullet points from what I have had to write in my journal so far. So why should you care about my journal our what I'm writing? It would be nice to publish my journal at the end of this year. Self publish, book publisher, I don't care. I think the journey in itself will be an eye opening experience for myself and maybe others.

We all tend to have the same issue's from time to time when it comes to trading, how each of us deal with them can be beneficial to others. I talk with @tradercisco, @50pips and @kosentrade all the time about trading and the emotions that come with it. I'm sure you have seen the "Get @piptee some midol" tweets from time to time. I don't like to fail and tend to beat myself up when I fail the trade. A trade failing I can handle because that is something we have no control over, but when I fail the trade by moving BE to soon, not taking profits etc, I get emotional at myself.

I will keep you all up to date on the progress of my journal, maybe even put some of it out there for you all to see. I would really like you all to stay on top of me also, don't let me fail you.

PipTee

Screencast by @piptee from Screenr.com