I see far too many traders destroy a session through fighting the market. Again and again and again.
You need to break the pattern.
Try implementing this rule:
Two Attempts – Then Reassess!
After two attempts at a trade idea, if it hasn’t worked, it’s clear that something is not right. You’re not in sync with the market.
Either:
- You have misread the situation and you’re wrong, or
- Your timing is out (which still means you’re wrong).
Break the pattern!
Two Attempts – Then Reassess!
Confirm your position is flat.
Step away from the charts.
Clear your mind.
Then reassess from first principles.
Try also to see the picture from the perspective of someone who might have the opposite bias to you. What are they seeing? Could they be right?
You may choose to get back in for a further trade (assuming session drawdown limits are not hit).
But you may also have prevented a meltdown; stopping a good trade idea which didn’t work from turning into an absolute mess of a session.
Here’s a recent trade sequence where I implemented this rule – Two Attempts – Then Reassess!
Two trades were attempted, based upon the idea that the prior day’s low resistance level would hold.
While the net result of both was a small profit, rather than loss, the fact remains that I was out of sync with the market.
Either my trade idea was wrong, or my timing was out.
Hindsight proves that this time it was a timing issue. The level did eventually hold. But only after providing some nasty chop around the area.
Regardless of this, the right action was to reassess; STANDING ASIDE until something clearer and easier revealed itself.
You don’t have to trade all price sequences. If something is not working, get out of there. Survive to trade later in that session, or even the next day, when your read of the market is more in sync with reality.
Don’t keep fighting the market.
Don’t let a good trade idea which didn’t work, turn into an absolute mess of a session.
Here is your rule:
Two Attempts – Then Reassess!
Happy trading,
Lance Beggs