but then this happened...
I got stopped out "Prematurely". Whether you're a Man or a Woman. Nobody Likes this. But MEN don't like this at all. ahem.
There is nothing wrong with getting stopped out like this but Let me ask you a question.
Let me Ask You a Question
"Should my trade plan have addressed this situation?"See what I just did there?
- I did not say, "One should question if this trade could have been managed differently?".
- I did not say, "Man, I should have stayed in moved my Stop Loss to worst spot i.e further up so that the trade could hit the Target Point".
- I did not indicate my unwillingness to follow my TRADE PLAN.
What should be the Question?
Instead I phrased my question differently. I said,
"whether my trade plan has or should have addressed this situation differently."
That is because I have already addressed all types of possible trade situations that the market might throw at me.
A Valid Argument
To make this argument valid, (the argument of whether I should have managed my trade differently) one will need to have seen a recurring pattern of such event. It mustn't be something that you saw on a couple of occasions. Trading is ALL about Pattern Recognition and Probabilities.
If you see a pattern often enough, create a hypothesis and go on search to prove it.
E.g. if you see that market starts to move violently right at London Open and you’ve seen it many times. That does not validate the argument unless and until you PROVE IT.
How Do I Prove It?Simple Answer. You need to do some backtesting .So go on and Backtest the idea then forward test the idea. The point is to first
FIND THe Problem. Prove it.
FIND The Solution. Prove it.
Because sometimes a problem doesn't really exist. Because when you do the research its not occuring often enough, so it's not really a problem
Likewise a Solution must be thoroughly checked.
The Problem of Dummy Traders
So when you start to trade, and you don't have a clue what's going on. What do you do? you consider this as a problem. The obvious solution you think is to educate yourself and so you find a mentor, and online learning portal like www.iTradeAIMS.net or visit forums such as www.ForexFactory.com or www.BabyPips.com.
You then start to implement your knowledge and become good at the game step by step. Wait...
IS that what people usually do? Not really. They just buy a crappy signal system sold by a good marketer. Yes... people don't look at the facts and figures of a trading strategy and/or the people who are promising to share their knowledge, strategies that are proven and help you cross that bridge.
The Emotional SolutionPeople feel an emotion and then they find an emotional solution. That's what they get. A Promise, a website with beautiful cars, houses and holiday destinations. They don't question, wait, hold on. I know this is the "result of trading successfully" I know that. But what about the merits of the actual service, the proven method, the proven strategy you are going to share with me? Nobody asks that question.
There is the art of selling and the art of teaching. Both are two different things. Most teachers don't know how to sell and most sellers don't know how to teach. Sellers can't teach, because if they did they won't be able to sell.
But I digress.
So the Question should have been,
"How often to I get stopped out because I move my Stop Loss too close. And the consequence is that price tags my Stop Loss and then continues to move towards my actual take profit or target point?".
This Question will SHAPE the quality of your trading.
Think about it. and let me know if you've ever thought about trading situation in this manner and does it make sense to you that this is the proper way of doing things when it comes to trading?
also, Have you ever actually written a proper detailed "business" plan for your trading business? If NOT Stop trading immediately, and work on your Trade Plan NOW...
If you need help with trade plan you'd be happy to know that we have a dedicated section on how to create your Forex Trading Plan, How to create your Plan for your Trading Business. We also have a copy of Immy's Trade Plan and we update it every year.
All the best