This Is My 10th Year Trading and I’m Not Ashamed To Admit:

This Is My 10th Year Trading and I’m Not Ashamed To Admit… I STILL MAKE MISTAKES TOO!

I was having a conversation with my brother (who’s also been trading for 6-7 years) and I mentioned how I terribly mismanaged a position on one of my accounts last year.

He was taken by surprise.

His reaction caught me off guard because apparently he was under the impression that I’m some sort of flawless trader, at least in regard to how I trade my system.

This is far from the truth and I want to briefly dive into false expectations and some detail on what it takes to be good enough to extract from the markets consistently

I’m not here to say you can be a sloppy day trader and still make money consistently. You have to be pretty damn disciplined, but you don’t have to be perfect.

What’s more important is how you respond to your mistakes and how severe these mistakes are. There’s a few things you can do so that if you do make mistakes, they aren’t catastrophic.

These tips will be under the assumption that you already have a trading system built off of your data.

There’s a few mistakes I can’t really afford to make 👇🏾

1. Position Size

2. Stop-Loss Placement

If the size of my position is calculated accurately and my protective stop is placed precisely, any mistake I make has minimal impact. It’s not ideal and it throws off my expected return but now it’s not detrimental to the trading account. However, there’s one more preventative measure that I’ve applied that really made human error less impactful.

I have a fail-safe. I have a max daily loss that automatically closes all positions open once its met. This is not to LIMIT my trading, but to protect myself from any accidental mistakes. We’ve all traded the wrong asset, fat fingered a position size or whatever unexpected human error that can exist.

I want to be clear, I don’t believe in limiting how many setups are taken in a day. Winning or losing, the probabilities play out in a random sequence so who am I to assume. I have a daily max to be the last source of protection from myself.

I only started doing this after f*cking up a Nasdaq long last year on one of my audited accounts. It was during the time when Metatrader was kicking tons of brokers off their platforms for licensing reasons. I had to change the way my copy-trader was setup and suddenly I had accounts with like 5 different trading platforms and the copy trader wasn’t designed to copy to all the different platforms yet.

I took my positions across different platforms while I was also live streaming NY session as usual. The problem was that I only executed the entry for that account, I didn’t place the stop. My thoughts were, “I’ll place the position first and then I’ll come back and plug in the stop-loss.” Well the problem with that was that high impact news happened 30 seconds after I executed the position…

Yeah…

Considering it was supposed to be a tight stop too, the trade became an absolute disaster. What was supposed to be a tight stop-loss trade resulted in a loss 15x bigger than expected.

Initially I was pissed because “wHaT aRe ThE cHaNcEs?!”

It wasn’t that I was unlucky. I didn’t prioritize responsibly, I wasn’t prepared and I didn’t have a plan of action IF something like this were to happen.

That’s what led to thinking about methods that can protect my capital in any worst case scenario.

This is not about replacing a stop loss or about being reckless. This is just a way to mitigate a disaster.

The goal is still to be as disciplined as possible in every aspect of your trading system.

So yes, I still make mistakes as a trader. When they happen, I take the time to dig into why they happened in the first place. What’s the root of the lack of discipline or sloppiness?

Position yourself so that your mistakes can’t knock you out and see how much more you’re likely to dive into yourself and self-correct.

The biggest asset to the health of your trading portfolio will be based on your preventative measures, your level of preparation and your willingness to make corrections.

Let’s crush this week one trade at a time.

-Mike Navarrete 🧙🏽‍♂️