Reader question: what to do about missing trades?

I got a good question from a reader, Eric:

Adam, can you please help me? I am going crazy because I feel I am missing the best and biggest trades. Overall I am making money but when I look at my charts and review I see that I am missing big moves and not picking the best stocks. This is making me driving me crazy. Any ideas?

question1Hi Eric. Thanks for a good question, and I can tell you that you are not alone in feeling this. Most traders struggle with this feeling. It pops up in two ways: sometimes we will just not be involved in a move that we wish we were in. For stock traders (and currency traders, to a lesser degree), there are so many “things” to trade that we can always look back and find stocks or currencies that moved better than the ones we picked. This is just because there are a thousand (give or take) choices and you have to select a few–odds are, you usually don’t pick the absolute best. (This is the same reason you usually aren’t in the fastest lane on the freeway!)

So what do you do about this? Well, first of all, make sure you have a good system that works. You didn’t give me a lot of information that I wish I had: what do you trade? How long have you been trading? How long have you been profitable? Without knowing things like that, it’s difficult to say for sure, but I’m focusing on this part of your question: “overall I am making money…” So, it sounds like maybe you do have a system and approach that works. You’re making money. You’re winning the game.

I’ll take a brief pause here and say that the type of intensive individual trade review advocated by some educators is, I believe, a serious mistake. This usually results in us digging deeper into randomness and inviting random influences to sway our opinions and trading. It’s better to review your methodology, process, and overall edge than to spend a lot of time at your desk going through charts of individual trades. So make sure you understand the edge you have over a large number of trades, and work to apply your system with discipline.

Pay attention, because I think this is truly the answer to your question: you must define what your job is as a trader. Your job is not to catch any move. Your job is not to be in the market when the market does anything. This mindset is damaging, and puts you in a position in psychological weakness. I’ve seen many professional traders and managers struggle because they are caught between the classic rock and hard place of wanting to manage risk but being terrified that clients will be angry if they are not in the market should it go up. You, as an individual trader, have no such restrictions built in. You are free. With the freedom comes power and possibility.

Define your job as simply following your system and process perfectly. Do what you’re supposed to do, and then do it again. Don’t stress about missing any move. It’s not your job and not your responsibility. Your only job is to follow your system and to do the right thing.


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 2 Comments

  1. Ger Vasius

    Like Livermore said: “As a speculator it is always far better to be safe on the outside wishing one was in than being trapped on the inside hemorrhaging capital at frightening speeds and wishing one was out!”

  2. edelweiss

    This post sounds like an answer to my question, I emailed you exactly the same question:) does that mean how many trades I do a day or how many open trades I should have should also be part of my system? After I pick my bet, just hope for the best:) thanks.

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