A bad trade
Posted by Ed
A bad trade usualy is one where you lose money.However I remember one trade that I lost a few hundred on but was proud of the way I stayed in control and cut my losses quicklywithout emotion..in a way,that was a good trade because I stayed in control,and I look back on that trade with affection even though I lost $....you have to stay in control in my opinion.It felt good to stick to the rules,,then hey youre out of it,it has nothing to do with you then on that level.
If you are not in control then it becomes like gambling and it hurts too much...i mean if you have profits but are unsure what the market will do next because you didnt plan that far,then you are really gambling and out of control.Same is if the market has moved enough the wrong way to invalidate a chartist type trade,a new pattern is emegring,the wrong one and you have a loss,and you hang on anyway..that is gambling and you are out of control there too.
someone here said leaving profits on the table hurts the worst.For sure.I was doing that so much I actually had to alter my time frame.I THOUGHT I was a 4 day timeframe,but the types of trades and chart patterns needed two weeks before they really paid off.I saw this pattern over and over and over.
So I put on the next trade,immediately had a small loss,but the chart still loooked good,so I held on,then it took off and I had a small profit.I held to my price target instead of shorting myself out of the real money like I usually do..and then suffederd through a pullback,then it went the right way and hit my target under good strength,and i had a 20 % profit on it after comms.
So now what.Do I abandon my price target established by my chart methods and bet that the strength and momentum keep it going.I decided to stick with the plan and bail out.The underlying (BS) immediately stalled and fell(I was long call with a 1 delta,went long when underlyer was at 8.75 sold out when underlier was 10 5/8..my target.
just some thoughts.i am not a pro,just a small traderi just think about my own trades and the psychology involved alot.I am not bragging,I post the examples to help people see some good chart ideas and some psychology,thats all.