My money was stuck in X, Y & Z and I don’t have excessive money to trade.
This is one of the most common message I get from time to time.
#1 Trading mistake: Trading without stop loss
Most likely, by the time you are aware you are stuck, your drawdown is huge. Instead of risking 2–3% (or even 5% of your capital), your floating losses could be 3–5 times of your risk, which is too painful to cut loss.
“Would I cut at the lowest point? By the time I cut, price will bounce back up, I am cursed!” — This is a common self-talk from a trader.
#1 Fix: Situation varies and it is really chart dependent.
One general rule: if I can’t sleep well at night and still thinking about what would happen to the trade, then I will need to cut loss. Set the stop loss immediately despite it is way too late, analyze the chart and look for opportunity to trail the stop up until stopped out to minimize losses.
#2 Trading mistake: Entry timing is not perfect
Price does not yet hit the stop loss while having minor floating losses. and hopefully the price can bounce back up as per the plan.
#2 Fix: Trading plan with chart analysis
If I’m using HOPE instead of the trading plan is not violated yet, I need to find out the right way to interpret the chart because “hope” should not in the trading plan. If my trading plan is still valid, I’ll stick to it till violation.
If my trading plan has been violated just that the stop loss has not yet be triggered, the chances of having a losing trade is still high and it is just a matter of time to face the consequence.
Opportunity cost for not dealing with these trading mistakes
Instead of hoping for the price to make a U-turn and back to the favorable direction, I’ll exit the trade (if trading plan was violated) and switch to other valid trade setup. In this case, I will make full use of the money hence the money management plus the time spent are efficient.
Else, opportunity cost will kick in. Instead of switching to other great trading opportunities to earn money, I will be wasting my time and money to hope for an invalid trading plan to turn valid (not to mention some mental suffer involved). Even under a lucky scenario, my trade turned out to be a profitable trade, this is pure luck and there is no way to repeat the lucky process.
Focus on what we can control so that we can repeat the success in the long run.
Watch the video below to find out how to analyze the price action of a chart and form a trading plan so that you can act accordingly using Gold miners stocks and Gold futures as case studies:
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Editors’ Picks
AUD/USD hovers around 0.6500 amid light trading, ahead of US GDP
AUD/USD is trading close to 0.6500 in Asian trading on Thursday, lacking a clear directional impetus amid an Anzac Day holiday in Australia. Meanwhile, traders stay cautious due ti risk-aversion and ahead of the key US Q1 GDP release.
USD/JPY finds its highest bids since 1990, near 155.50
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, testing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming Japanese intervention risks. Focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold price treads water near $2,320, awaits US GDP data
Gold price recovers losses but keeps its range near $2,320 early Thursday. Renewed weakness in the US Dollar and the US Treasury yields allow Gold buyers to breathe a sigh of relief. Gold price stays vulnerable amid Middle East de-escalation, awaiting US Q1 GDP data.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.
Meta Platforms Earnings: META sinks 10% on lower Q2 revenue guidance Premium
This must be "opposites" week. While Doppelganger Tesla rode horrible misses on Tuesday to a double-digit rally, Meta Platforms produced impressive beats above Wall Street consensus after the close on Wednesday, only to watch the share price collapse by nearly 10%.
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