1. I looked at Stock X. Hypothesis: It is trading at $132. Price Target: I think it will go to $140. Price Bottom: But first I think it will go to $128. I see the stock go from $132 to $135, then back to $134 and I jump in to buy it. Stock falls all the way to $128 all day and rebounds to $132. I exited. 2. What is the reason why someone doesn't stick to his first instinct for entry? 3. How do I correct this? Thinking or impulsiveness?
FOMO, Important to learn to pass on trades. I did it myself yesterday with silver . . Too late to the party.
Every succesful trader has to deal with his own psychological aspect in trading. Knowing yourself, how you react and most importantly how you adjust it, is the key. There are books you can read about it, you can get a mental coach, or be so 'aware' that you can fix it on your own, after carefully documenting what you think and feel at that moment and adjust accordingly.
Amygdala (fear of loss) and - possibly - lack of a strategy. The first is corrected by willingness to repeatedly go through the experience of moderately high pain (losses).
What is your trading plan for entry and exit? Saying that you were excited is enough that you have no clear trading plan or enough experience. You are supposed to only feel boring because the result after entry will always be three situations; profit, breakeven and loss.
Typically its someone that either doesn't understand the statistics of their trade method or they're trading without a trading plan. The brief hypothesis you gave is not a trading plan nor a trade method. For example, you use the words "I think" a few times without explaining the WHY...usually that WHY will reveal the trading plan or trade method. The above allows emotions, outside influences to control your decision making process...you enter / exit trades and then not even remember WHY you got in the trade in the first place. P.S. Why use the word Hypothesis when you could have used an example of a real trade ? wrbtrader
I agree wrb. Bob2007 what you experienced is so common for traders as you know. My stance is that the impulse we traders have to behave this way does not get corrected by simple actions like risking less money. Although that helps, these impulses are deep in the unconscious. They are kind of similar to addiction, etc. where we want to control it, but just can't--at least consistently. (If you are in "control" 90% of the time in trades--you can still blow all your winnings in the other 10% so that doesn't work.) To put it simply, I believe this situation is created by unfelt / un-dealt with feelings and experiences from the past that are playing out. My work with traders as a coach is to help you feel and process all this stuff so you are free from it. I know some traders don't agree with this approach, but it works. And, the alternative to not really dealing with this stuff at the core can be pricy and painful. I have articles on my blog that give you more detail on this if interested.
Market chop pushes you into a quick trade, even though it's better to wait for a good set up. Market has to mislead everyone, like playing chess against a super computer.
%% Like a limit order+ preplan it. Prefer written plans. TQQQ ranges more than that a day; so those number can work/break out/breakdown any way. BUT tqqq is so extended, summer rally tends to be the weakest-- not in tqqq now. Long a cash tech etf……; its long online /short stores thru a bank swap/etf. NOT an ETF tip or prediction...…………………………………………………………………………………………………………….IF we were in 4th quarter[oct-dec] it can pay to stay in; summer weak rally I may have sold tqqq if it did that.