Ming Jong Tey
Independent Analyst
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
EUR/USD trims gains, back below 1.1800
EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.
GBP/USD off highs, recedes to the sub-1.3500 area
Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.
USD/JPY sticks to gains above 155.00, over one-week top ahead of US data
The USD/JPY pair gains positive traction for the third straight day and climbs to over a one-week top, around the 155.35-155.40 region. Data released early today showed that Japan’s key inflation gauge eased to the slowest pace in two years, tempering expectations for an immediate policy tightening by the Bank of Japan.
Editors’ Picks
EUR/USD: US Dollar comeback in the makes? Premium
The US Dollar (USD) stands victorious at the end of another week, with the EUR/USD pair trading near a four-week low of 1.1742, while the USD retains its strength despite some discouraging American data released at the end of the week.
Gold: Escalating geopolitical tensions help limit losses Premium
Gold (XAU/USD) struggled to make a decisive move in either direction this week as it quickly recovered above $5,000 after posting losses on Monday and Tuesday.
GBP/USD: Pound Sterling braces for more pain, as 200-day SMA tested Premium
The Pound Sterling (GBP) crashed to its lowest level in a month against the US Dollar (USD), as critical support levels were breached in a data-packed week.
Bitcoin: No recovery in sight
Bitcoin (BTC) price continues to trade within a range-bound zone, hovering around $67,000 at the time of writing on Friday, and falling slightly so far this week, with no signs of recovery.
US Dollar: Tariffed. Now What? Premium
The US Dollar (USD) reversed its previous week’s decline, managing to stage a meaningful rebound and retesting the area just above the 98.00 barrier when tracked by the US Dollar Index (DXY).
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