Learning from trading mistakes

Thursday, 12th November 2009 09:43 - by Boredmum

How many times have you made an error in your trading and thought “I don’t believe I done that, I should have known better. I’ve made that mistake before”? I was talking to one of my ‘trading’ friends last week who stated the same; we make the same mistakes but often don’t learn as we make the same error of judgement again. It got me thinking to the point of conclusion. A couple of weeks ago I started to do a little ‘trading’ again. I was ‘on fire’ as I had something like five successful trades in a row. Okay, I missed the top many times, but I was pulling out a fairly decent profit for a day-trade. So trade number six came along…I have no idea why I bought this share. It was a share that had been recommended and, for my own reasons, I’d previously decided not to invest. But here I was, on a day that news had been released and the sp was already marked up, with the ‘rampers’ making their silly price predictions. Now, I knew all this as I was deciding to take a ‘punt’ on it. I quickly made a loss. Thank goodness it was only a small amount of money I put in. So what did I do? I stopped trading as I questioned what I had done. I was so annoyed at myself, and for a week I tried to work out why I had bought in the first place. I came to the conclusion; it really didn’t matter that I got it wrong (as far as ratios went) if I continued to trade and kept to a similar ratio of one failure from six trades I would be doing well. I mean, if we didn’t make any errors of judgement then do you not think the whole world would be trading as it would be so easy? So, the next time you make a mistake, accept it, move on and, as long as you are winning more than you are losing, then you are doing well. We are only human and mistakes will always happen.