I was looking through my first trading log today and at the back I’d noted down some “Lesson’s Learned” from the period it covered based on the notes I’d made over time. Seeing these I thought they were pretty generic so figured I’d share them with you - my silent readership! 
[B]1. Do not live trade untested methods[/B]
I have always shied away from demo testing using a demo account and although I recommend it to others, it’s just something that isn’t for me. However this rule still applies to me and what it means is - don’t just back-test a method and then start trading it. Now, if I have an idea about a new or improved approach to the market I’ll back-test it thoroughly but then also forward-test it on paper by recording them as ‘missed trades’ (see previous post) in my trading log. Only once I had sufficient data and confidence will I then live trade the method.
[B]2. Do not trade into resistance[/B]
Obviously everyone has their own approach to the markets. However for my approach I’ve found that it’s best not to take a position when price is just about to head straight into an area that I’ve identified as potential resistance on the chart. It’s usually best to skip the trade until the picture becomes clearer - either with a reversal or a breakout of the resistance zone.
[B]3. Consider Daily ATR before entering a trade[/B]
The daily ATR is the average range that a market moves in a 24 hour period. If the market has moved 80% of its ATR prior to entering the trade then the likelihood is that price hasn’t got much further to go today so is it worth taking the entry? You’ll notice that this ‘lesson’ is worded as a consideration rather than a must, meaning it should form part the trade planning but not necessarily stop a trade being taken.
[B]4. Do not leave waiting orders after entry window has closed[/B]
Most trades have a ‘window’ of entry. This could be a rule such as it must be triggered on the next bar, or the trade is scrapped if the stop line is hit before the entry line, or that it must trigger during the current trading session. Whatever the rule is, any pending orders that are sitting in the market must be removed if the trade is nullified. Without exception, every time I accidentally left an order in the market and it triggered, it went on to be a losing trade. Simply put, if the setup isn’t there any more, delete the order!
[B]5. Do not add to a loser[/B]
This is also known as averaging down and simply put means taking another trade or position in the same direction as the initial trade but at an inferior price (lower than entry price for longs). If a trade is under water then obviously that means the market is not currently going in your direction - so why would you want to take another position? Only add to a position if the market is currently going in your direction (also known as adding to a winner).
[B]6. Consider exiting a trade if market trends sideways from entry[/B]
This is another advisory lesson and essentially means that if the trade isn’t moving then take another look at the market and reassess whether your original assessment still holds. A sideways market means that neither bulls nor bears have the upper hand for whatever reason and as such there is not a directional bias so potentially the market could break in either direction. Usually, a trade that goes sideways from entry ends up becoming a loser for me so there has to be compelling reasons to stay in the trade.
[B]7. When entering a trade ensure the target is a technical level, not an R-multiple[/B]
This came about because I tended to be lazy in my trade entry. It allowed me to set a stop size in pips and a TP in pips too so I would just set the TP equal to the Stop for ease and speed. The knock-on effect was a failure to properly assess the potential reversal points and not be fully aware of the geography on the chart. Without knowing the resistance points price would either reverse before the TP, or sail through the profit order thus keeping me out of additional profit.
[B]8. Always note the ADRs at the weekend[/B]
As the ATR became part of the trade analysis I needed to know what those figures were. However, laziness meant that sometimes I wouldn’t bother to update my figures and therefore would have to rely on the previous weeks, or older. ATRs will change over time, especially as markets go from stagnant to volatile periods, and so the figures used must be up-to-date otherwise they’re worthless. This also forces an adherence to a structure and routine. I also mark up my S+R areas at the weekends and if I’m not doing one, I’m probably skipping the other too. Failure to plan is to plan to fail.
[B]9. I need to focus more when trading[/B]
This is of course a very personal ‘lesson’ but I found that once putting a trade on I tended not to give it my full attention. This was almost certainly a form of psychological self-sabotage as managing the trade is far more important than the entry and skipping it means you’re a lot closer to gambling than trading.
And there you have it - the failings and the lessons learned from the first trade log I kept. May this help and inspire you!
I have a friend who lives 2 hours away and we were talking by telephone.Three weeks ago he got the flu and it knocked him out for 7 days.
Long may it continue to evolve to provide a useful trading resource for you. Thanks to all those who continue to show patience and drop by to read the updates when they come and I wish you all a Merry Christmas and a Happy New Year!