Whether you trade more on the fundamentals or you stick to the technical side of things, you are not immune. It goes something like this: you really like this trade. Most of your indicators are pointing to a good trade, your information has it that such and such are coming together for a breakout. I'm assuming you are a decent trader, you're not going to just jump into a trade for no reason. So you wait for your fine-tuned entry point, it arrives, and you pull the trigger. You're in. You are patient, you know it is not going to happen all at once. Maybe it is just flirting with breaking out, it goes into profit and then back again. However it happens, and either way it may be moving, you still believe that this is going to eventually move in your favor. So you hold on.
This is where the problem begins. You're holding on because you really do believe this will turn into a good trade. At what point do you stop believing as the market continues in the opposite direction of your profit? Basically, you're hoping it will get better. And hope really is of no use to you right now. We know that emotions kill trading. But even the good emotions, like hope. Because what you have to do right now is stick to the plan--your stop-loss should be in place, and where you placed it should have nothing to do with how you feel about this particular trade. Giving it more "wiggle room" because it's a bit more volatile won't work. Waiting to put in your stop-loss because you want to see how it goes forward won't work. Both of those are hope disguised as intelligent reasoning. And hope can even look like pure futility when you move that stop-loss further away from your entry point. Yes, I've even done this. I was sure it would turn around, and I didn't want to sell and then have to buy in again. Hope made me do it.
You could be in commodities, foreign currencies, options... It doesn't help being right in your analysis more than half the time if you are consistently losing more money on the times you were incorrect in your researched assumption. So one of the little things you can do, is to not leave any room for hope. No room for hoping your trade will turn around. Just a steady set-in-stone plan to exit your trade, put into place before you even get into it. Yes I really did say it--Don't hope--just stick to the plan.
Troy enjoys day trading--whether it be in commodities, foreign currencies or options. He believes in having a plan and sticking to it, continued learning, and learning from his mistakes. He has a trading course available at http://www.forextradedaily.com/
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