Things That Get Me Into Trouble

In line with recent under-performance, and terrible risk metrics. Wanted to outline some trading behaviors that get me into a little bit of trouble; and will be to avoid going forward. In general these behaviors are when I deviate from my style/methodology of trading.

(1) Shorting at the lows, or buying at the highs.

• Sometimes I want to take a breakout/breakdown trade. In this case the stop would usually be tight and if the breakout fails the stop triggers. Where/Why this gets me into trouble is that although I know how to distinguish between good breakouts and bad ones, I tend to become emotional when the move confirms my bias and get faked in.
• Sometimes it is required to get a reasonable position size on. If I ever do it, risk must be to vwap; and subsequently at least smaller than 1/3 of desired position (prepared to add around vwap/support).
• Covering risk quickly can help as well.

(2) Trading premarket.

• Stops are more difficult in premarket. A few factors go into this. Liquidity (obviously), but also that I like to stop when I'm proven wrong (rather than by price) - and usually it is hard for premarket action to prove an idea wrong.
• Sometimes it can be unavoidable. Again, I'm happy with 1/3 size; covering risk quickly.
• Same again, as premarket begins to confirm trade idea I can get emotional.

(3) Going full size immediately.

• Big part of my edge is trading around my position. This reduces my ability to do this. Also can tend to me going above full size.
• Also something I have a little difficulty with is nailing the top/bottom, thus using a close hard stop (which is what a full position size requires) isn't a strength of mine.

(4) Flipping a position immediately.

• Often times price action will cause me to be proven wrong on a particular idea, and in turn it will validate the opposing bias. This does not mean that I need to be in it immediately; but rather pick my prices, and trade around the position like usual.
• In this case the emotion comes from taking the loss (correctly, and sometimes bigger than ideal); and wanting to make it back.

(5) Not covering risk early.

• Not a huge one, and I don't struggle with it too much. But one of my big edges is position management, and trading around a position. By not taking a little profit, I am reducing my ability to scalp around a core; and reducing my flexibility if a trade goes against me.