WALLSTREET ARCHIVE

2 Easy Trading decisions that will prevent you from failing miserably

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“I dont take losses and i’m never wrong”

Many traders make the mistake of concentrating all their efforts in looking for entry signals, but they pay very little attention to when and where to exit. Many traders fail to sell if they are down on a position because they don’t want to take a loss. Get over it or you will not make it as a trader. If your stop gets hit, it means you were wrong. Don’t take it personally.

Hitting a stop-loss is not the end of the world, the market will always be open to unlimited opportunities. There will always be a tomorrow. However, your trading account and mental fortitude are limited so trades must be contained in order to prosper on the next trade opportunity.

Where are the exits?

Before you enter a trade you should broadly know where your exits are. There at least two for every trade.
First, what is your stop loss if the trade goes against you? It must be imprinted in your plan.
Second, each trade should have a profit target. Once you get there, close a portion of your position and you can move your stop loss on the rest of your position to break even if you wish.

Changing your mind

Sure, there are situations you may look to make an executive decision by changing your plan of exit during the course of holding your trade. You may have assessed the market variables and seen it profitable to hold on your exits a while. Know by doing this you have crossed the line of discipline.

Breaking discipline is a short term game, you may fare well in individual trades, but this short term success is a rabbit hole into developing bad habits of breaking discipline. In which case more often then not will have a negative impact in your long term trading journey.