#7 So I made a trading mistake what next...

 As alluded to last night, this post is dedicated to a recent trading mistake I made, how I did and what I'm doing to prevent it from happening again.
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Firstly in terms of context, I've previously mentioned that I've dabbled in many different types of instruments, ranging from micro-caps on the ASX to commodities futures. The markets where I have gained and lost the most is probably the futures markets. I like futures because they are easy to trade (neigh on 24/5), have an inbuilt margin, and understand from a technical perspective.

So over the last couple of weeks, I have been slowly building a position in the Corn Futures, compounding as the price moved in my favour. Over time this leads to a pretty hefty open profit, around 8 to 1 compared with initial risk (i.e. distance from my entry to initial stop). This was psychologically quite thrilling, as I haven't had such a big open profit in quite some time (through meddling with different systems and changing my approach, and generally not having a lot of confidence in my system).

Anyway, so what did I do wrong. You can probably see from the language in the para above, I let my emotions get hold of me. This created a bit of fear for the big open profit. This was then exacerbated by an email from my broker telling me that my position would be auto-closed soon as corn is a physical delivery contract. For some unknown reason, my broker doesn't want to receive several thousand bushels of corn at their office… I can't understand why. So essentially closed my position before my exit point based on the above, even though I had around 20 days until the autoclose. Why did I do this, I was scared of giving back the open profit, and I had the excuse of my brokers' email. I should also add that when I sold, the market was retracing a little, which also adversely affected my emotions.

So what was wrong with this decision:

• I didn't follow my trading plan
• I allowed emotions to my over-rule my process.
• I gave into fear even if I disguised what I was doing.

​So what's happening now:

• The market recovered and has now gone up around 60 cents a bushel from my exit.
• I re-ended the trade on the following months' contract but at 1/5 the size of my previous position.
• I have FOMO wanting me to chase the trade and open my full position back up.

So what have I done to stop me from doing this type of trading error again:

• I've written this blog post :-p
• I've updated my trading plan to include a new line about not being too concerned about auto-closes and also take contracts further out to avoid the issue for longer.
• I've recorded what happened in my trading log.

The key thing that I keep telling myself though is to not dwell on the mistake but to learn from it. 

Anyway, I hope someone finds this helpful and can avoid a trading mistake themselves.

As always, happy trading and thanks for reading my blog.

Cheers,
Nick the Trader Guy
April 21