This is the wrong way to look at a winning or a losing trade. And especially it’s not good to analyze from this point of view your trading progress.
A good trading day is not about how much money you’ve made. It’s important to follow your trading plan that you’ve backtested in terms of strategy and risk management. You should never deviate from the plan and let your emotions dictate your actions.
The worst trading day could be the most profitable day based on the money that you actually made.
If you make money it feels good because you can go and buy all those things you really want, but you broke the trading rules and you’ll have the tendency to break these rules in the future trades.
For example, if your trading plan says to only risk 1% of the account on each trade, but because a particular trade looked so good that it can’t fail, you decided to increase your risk. If that trade was a winner, the brain will want to repeat this feeling of success. But the laws of probability will dictate that one day, you’re going to get wiped out.
It’s the same principle for moving stops (a stop order is where you place an order in the market to exit a losing position). If you move your stop because it was getting too close and it results in the breakeven for that trade, then you might feel good. Wrong. If you move a stop and it turns back into profit, you’ve had a bad day trading because of the tendency of moving a stop as it’s getting close. This is going to lead to a slow bleed of the trading account.
A good trading day is not about the dollars that you’ve made in the day. It’s about trading your plan without deviation and sticking to the risk management perimeters and to your strategy rules. You can still have a losing day in monetary terms, but a great day if you’ve stuck to your trading plan.
A bad day is when you broke your rules and lost money at the same time. And the worst day is when you break the rules, you make money that it’s going to result in you not being a trader, but ultimately a gambler.
My advice for you is to have a trading plan which involves a strategy and some risk management criteria. You need to make sure that each trade that you take is complying with the trading plan. A good way to do this is to have a checklist which is completed on each trade before you take it.
That way, you can assure that your trades are always good, and when you’re having good trades, the profits will be sure to follow.
I hope you have found this valuable and if you would like to learn more, join me in the Trading Room. I hope to see you there!