This morning I prematurely closed a trade on the GBPUSD. Price moved to within a few pips of my profit target before retracing. Once it retraced a few pips to breakeven, I became spooked and closed the trade with a tiny profit.
The result of the trade doesn't matter, even though I still won. This was a BAD trade because I diverted from my trading system, purely for psychological reasons. I last checked the market a few hours ago and price was again a few pips from my profit target.
Many traders have psychological weak points. Some are too scared to pull the trigger and enter a trade. Others are too impatient and enter sub-optimal setups. I hover somewhere in between. I can patiently wait for weeks for a valid signal, but when the trade is open, I want it to close as soon as possible, probably due to a combination of impatience + fear.
How to overcome my weakness? I noticed my emotional attachment to an open trade correlates with my time spent looking at a live chart. Reducing my "live" time to an absolute minimum will help.
A part of me also foolishly believes I can massage my edge if I manually manage my open trades, rather than stick to my systems. As a trader evolves, I believe they become more discretionary and less mechanical. But I'm not at that point and I definitely shouldn't be experimenting with live money!
I've also assigned myself a psychological goal. If I can finish the Australian financial year in profit (end of June 2013), then I think I can call myself a professional trader. It's a big call, I suppose, but I've already been trading live for seven months and generated a bumper profit (25%+ per annum so far, projection 40-45% by end of June).
However, I fear this goal may actually impede me. I can simply stop trading until the end of June 2013 and fulfill my goal of ending the financial year with good profit. But is this what a professional trader would do?
Of course not. A trader trades whenever possible. I think I will have to "delete" this goal from my mind as it is having an adverse impact, making me overly scared of losing trades (lose too many and I won't be able to call myself a "professional trader" anymore, an aspiration I clearly want).
Instead of shooting for "targets", I think I should focus on the consistency of my trading and sticking to my systems. This is what real professionals do.