TraderFeed: Discovering Your Trading Psychology With Your Trading Metrics

Jeez both of those sound familiar…


2)  Losing money during quiet market periods – One analysis I like for stock market traders is to break P/L down by VIX periods.  How does the trader perform when markets are most and least volatile?  How well does the trader transition from higher to lower volatility periods and vice versa?  For daytraders, how does the trader perform during midday hours vs. early mornings and late afternoons?  During quiet periods with narrow ranges, does the trader make more trades or fewer?  It’s not uncommon to see risk-prudent traders struggle when volatility rises and aggressive traders struggle when volatility is crushed.

3)  Losing money with good market views – This one is a little more challenging to analyze, but very worthwhile.  What happens to traders’ positions *after* they exit their trades–particularly after losing trades?  Very often, traders have a correct market view and still manage to lose money.  By placing stops too close to entries and by adding to positions when moves have already extended, traders generate good ideas but execute and manage them poorly.  A common variant of this problem is placing profit targets too far away during lower volatility markets.  Trades start out in the money and end up scratching or with losses–a frustrating experience to be sure.  Sometimes we see traders taking profits in trades that often ultimately extend far more in subsequent hours and days.  That occurs when ideas are generated on one time frame of analysis, but managed (for psychological reasons) on another, leaving plenty of money on the table.

via TraderFeed: Discovering Your Trading Psychology With Your Trading Metrics.

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