Another thought. There are times of the day (not specific times, but ranges of time that depend upon events like reports or rest/lunch periods, closing times for other markets and things like that) that are more likely than others to see a seed shift in directional bias or an accelleration of the existing direction. Awareness of these can certainly help along with specific levels and S/R for the instrument you are trading. These are the points where one would most expect things to turn if they are going to. Best Natalie
Do you know WHY you do this? I do! Its because you're afriad to lose money, pure and simple. I know 'cus I've been there. Your stop is nothing more than part of the plan. Somedays they get hit and reverse, sometimes they save your ass, somedays it just doesn't make any sense at all, but you have to honor 'em. Quit trying to be cute. Plan your trade and trade your plan.
The most dangerous words in trading are "... but I got out early." In a way it's worse than taking a loss, because it messes up your thought process. You are vulnerable to trying a revenge trade, to push things to make it back. I think there must be a high correlation between "too early exits" and big mistakes in the trades that follow. The solution is obvious. Whenever you hear yourself say you got out too early, remember what happened this day and resolve to play it very safe.
LOL, my whole first year was chock full of those days - it cost me many thousands to learn not to do that. And to learn risk/reward. More time, more experience, more discipline, stop changing charts/indicators around, simulator to learn to trust rules, etc. etc. - most things you read here are true. Best of Luck, Paul
IMHO, a trader CANNOT be accomplished until he realizes and understands the fundamental reasons behind this! "Feels like the entire market is watching ..." is in fact precisely what happens! This is caused by pro's that literally create this situation to appeal to your emotions until you can't stand it any longer, pull the trigger - and get shaken out! The pro's are just waiting for you to do it - So they have a thinner market on their side (less comp), more volume (many exchanges are run largely by ppl who profit from volume rather than price) and more liquidity, plus they can get better fills! To you, it's pure torture. To them, it's easy, low-risk money (because you're giving it to them out of fear/greed)! Once you know and understand this, your trading will change dramatically. You can now turn the spike around and go with them! Most traders sit in the tree with their "standard" stop-losses and discretionary stops. Smart traders, however, see what's really going on by looking at bid/ask levels, Tick Fib retracements, fair value and logical overextension. That way, they can use this "shakeout" to add to their position at very low risk - Rather than stopping out! Another good thing that can help with your trading discipline is to ask yourself (when you're anxious to exit) whether this would be a good opportunity to stop-reverse your position. If it seems like a pretty low-probability setup for going "the other way" and you just wouldn't do it, then chances are you're going in the right direction! This can help immensely. A famous trader's rule says that the best time to go long is when you're exiting your short. But I won't emphasize on this. Handle that with care. Just look at whether the opposite position would be a good trade, and if it's not, then you may consider a premature exit. Go with the real pro's. They know what they're doing. Ask Natalie, she knows "Don't sit in the Tree - Shadow the Shaker and shake with him!" is my personal motto here. This is probably my most fundamental trading rule! Play the spikes and wiggles if you can. - They give brilliant scalping opportunity - Always have this in the back of your mind: What goes up fast, tends to come down fast! And vice versa. If you don't want to play them - At least know about them! Know what's going on! Don't be a blind fool for the pro's. Remember, there's only 2 kinds in the market: Lions and Zebras. You can only be one. Choose wisely because there's only one right choice. Pick and then stick. Emulate. Good Luck, and Happy Trading! ~The Scientist
Very good description. The other ones are the 'I'm bored - this is slow - let's create some action' spikes, and the 'I've just got back from lunch lets get trading' spikes. Natalie
I think it happens to all but the very best. Just realise when its happening, and know that CASH is an excellent position.
I prefer to trade illogical overextension......just like the SPY at 98.20 a few minutes ago..with my logical exit right here at 98.6.....nice post Scientist.
The best advice i can give you is define your edge. keep focused and be confident. Trading is a learning experience.Manage your risk and dont overtrade. Rememember the markets are random,use stops and let your profits run. Above all be patient and fight and identify your weaknesses they will all be psycological. Your edge will make you money. Last but not least learn from your mistakes. Good Luck Wavetrader