Trader Mindset What I did to improve my P&L when I was starting out
Mar 12, 2024
The discussion kicks off with a critique of popular trading adages, particularly regarding managing winners and losses. Techniques like trailing stops and position management take center stage, emphasizing the importance of rules in trading. Limited capital and opportunity costs are explored, alongside the wisdom of cutting losing positions before weekends. The concept of preemptively exiting small losses is introduced to conserve mental energy. Finally, the dangers of clinging to losses are highlighted, leading to the crucial lesson that the first loss is often the best loss.
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First Loss Is Your Best Loss
- Winners often don't 'take care of themselves' without rules to manage them.
- The first loss you take on a trade is usually the best one to preserve capital.
Use Clear Rules To Trail Winners
- Trail winners using a clear rule set like structure or percent stops.
- Lighten positions as they move in your favor if that fits your plan.
Mental Cost Of Sitting In Losers
- Holding onto losing trades consumes mental energy and reduces decision quality.
- Small, quick losses free up attention for better trades and prevent cascade losses.