Losing cause unstable emotional state; after taking a loss many feels they need to obtain what they loss soon as possible, that is “revenge” because they be beaten by the market. Of course, angry state, make us very euphoric; nobody wants to lose, but think this way… Nobody can win every time and losing trades are part of this business. Let’s see this recently example on Usd/Cad… See the chart below.
Before I enter a trade, I built a clear image inside my mind about the possibilities. Nobody can know the future; and the price can go up or low. Of course; I expect the price goes down, but ever the possibilities of be wrong exist. I evaluate and put my stop loss and profit target. I know when get out if the price goes against me. I know the exit before I enter a trade and ever planning this before taking a position. I consider 3 possible exits: Taking profit target, Trailing stop and taking a loss. I not have problems taking a loss, because I know what I doing, and I understand this: taking a loss is part of this business.
In the chart above you can see the position is turning against us. We can be taking 20 pips (or little more). Maybe used a trailing stop and our position at this time be closed; we not win nothing, but not lose nothing; break even trade; but in this example we not use trailing stop… or not move out stop to break event.
What happened?
See the chart below.
The price hit our stop loss... and the pattern mutated. Is ok for me; I sell inside the red circle. Because, for me is another opportunity. Not have problem if the first not works. The market is not a perfect thing. Success is like Soros says; the key is how much you lose and how much you win… something like that. I hope this was helpful. have a great weekend!
What happened?
See the chart below.
