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Tiny Trading Account Challenge Day 4: $-131.11

Tiny Trading Account Challenge Day 4

January 11, 2018

Don’t let your losers exceed your winners.  It’s a cardinal rule that traders have heard many times and for good reason.  Reasons like today when I allowed one good, but poorly executed trading idea wipe out all of my gains from Days 1-3.

On Day 3 of the Tiny Trading Account Challenge I was feeling really good about my progress as I’d already put myself ahead of my planned gains by approximately one day.  However, my eagerness to build a cushion to help keep me on track during the inevitable choppy trading periods resulted in me taking on too much risk.  I then closed out the trade at a loss at about the worst possible price and reversed directions compounding my overall loss.  Fortunately, price consolidated for a number of hours allowing ample time for me to reassess and come to the conclusion that I should have stuck with my initial trading idea.  I closed the short trade and reversed just in time to profit from a large bullish move, recovering approximately a quarter of what I’d lost.

Today’s loss is certainly a setback, but not one that’s insurmountable.   My estimate is that it will take me until the middle of next week to climb out of the hole that I dug and put myself back on track towards my goal of growing a tiny trading account from $1,000 to $100,000 within a 1 year period of time.

What Contributed to My First Losing Trading Day

  • I bought into a bull trap
  • I took on too much risk
  • I placed too much certainty in price taking the path of least resistance
  • I second-guessed my analysis and closed my winning trading idea at a loss
  • I reacted to price by reversing my trade and not sticking to my game plan

In the following video I review the Forex trade that resulted in my first losing day of the Tiny Trading Account Challenge.