Tag Archives: Psychology

What’s Going On when you Hold Past the Stop

 

I'm always fascinated to hear from traders who have trouble exiting a trade at the stop loss. The ones who move the stop loss further away to avoid the exit. And then move it further. And further.

Until eventually, they can't take the pain any more, so they get out of the trade and destroy several days, weeks or even months of profits.

Personally, I don't recall ever holding past the stop, although I have found evidence of having done it once in the past while reviewing old charts.

Hopefully this was a one-off occurrence. Either way, I've clearly learnt from that at some point.

No-one likes a loss. Me included. But you need to be quite comfortable taking them.

For those of you who have yet to learn how to take a loss, let's discuss what is happening when you hold past the stop.

(Noting of course that this is not always the only issue. Maybe not even the primary issue. Everyone's situation is somewhat unique. But it is a significant factor that I see in a whole lot of cases. So if you're letting price run through you're stops, give this some consideration. It may just be the pathway you need to explore to find your way to greater success.)

This is what we're talking about…

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

In many cases the primary issue is NOT that you fear losing any money.

Often instead, the problem is that you don't want to be wrong.

YOU DON'T WANT TO BE WRONG!

You rationalise that if you just give it a little more room, and a little more time, price will turn around and prove you right.

It's all ego!

What does it mean to be wrong?

Every trade you get wrong is a dagger in the heart, reminding you of every time you've been painfully wrong in the past. Every time you've failed at something. Every time you fell short of your hopes, dreams and prayers.

Every wrong trade is one small step closer to the ultimate failure of your trading business.

And when you're no longer worthy… what will your family think of you? What will your friends say about you? What will your own mind say about you as you desperately try to fall asleep each night to forget the pain?

You don't want to be wrong!

So you move the stop to give it a little more room. But the fear only increases as price continues to move against you.

You give it more room. Again the fear increases.

And then again… you give it more room.

Until finally… acceptance… you know you're wrong.

And now it's about the money.

The loss is big, but fear of it getting even bigger lets you get out. Because you KNOW you're wrong.

Again, please note that this is not always the only issue. Maybe not always the primary issue. Everyone's situation is somewhat unique. But it is a significant factor in a whole lot of cases.

So if you're letting price run through you're stops, give this some consideration. It may just be the pathway you need to explore to find your way to greater success.

Here's the problem, as I see it.

You're playing the wrong game.

You're playing a game of individual trades.

But this business is not about individual trades.

The outcome of any one trade is irrelevant.

We profit over a series of trades.

You need to accept that this game is not one of being right. But rather one of managing a sequence of wins and losses so that over a large enough sample we can produce a profit.

Wins!

And losses!

They're just a part of the game.

What if you accepted that half your trades would win and half will lose. And you made it your aim to ensure that over any series of trades (20+) your average win was greater than your average loss?

To do this, you absolutely CANNOT let your losses run larger than they need to be.

Take your losses, quickly and decisively. Keep them small. It's only one in 20+ trades in your current series. You've got a whole lot of trades still to come. And some of them will more than compensate for the small loss.

By all means, aim for as high a win rate as you can achieve. But seriously… a 50% win rate IS enough. Just aim to ensure your average win is greater than your average loss.

Happy trading,

Lance Beggs

PS. If this article was useful, you might want to read this as well – http://yourtradingcoach.com/trading-process-and-strategy/Winning-Through-Losing-Better-1-of-2/

 


 

Learning from Baseball’s “Mental Reset”

 

I recently sent out the following two posts via social media, discussing the importance of having a plan in place to quickly clear your mind and get back into the game, whenever you sense frustration of any kind:

<image: Learning from Baseball's "Mental Reset">

<image: Learning from Baseball's "Mental Reset">

In response to these posts, I received the following exceptional email:

Hi Lance,

I liked your recent Twitter post about your "Regroup Procedure" after losses and thought I'd share something I learned while playing college baseball that I have applied in my trading.

We practiced what we called our "Mental Resets" while batting. A mental reset is required whenever anything "shocks" you and gets you off your plan at the plate. Every time you walk up to the plate, you should have a pre-meditated plan of the pitch you are looking to hit and anything that can dissuade you away from that plan has to be combated with a mental reset to get you BACK to your plan.

The physical act of mentally resetting is to: Step out of the batters box, focus on a small spot on your bat (we call it our "zero point"… We want to get back to zero emotionally), and take a slow deep breath. You then reaffirm your plan in your head, and step back into the box with confidence.

Our 5 Automatic Mental Resets were:

1) Swinging at a pitch that doesn't match your plan… – Swung at a bad pitch… step out of the box and RESET.

2) NOT swinging at the pitch that you were looking for… – You had a plan and for whatever reason you didn't pull the trigger on your pitch… RESET.

3) Bad call by the umpire… – You didn't think it was a strike and your upset. The umpire is out of your control… Step out and RESET.

4) Brush back… – You almost just got hit by a pitch. Your heart rate is too high and you aren't in a good state to be confident stepping back into the box… Step out and take a MENTAL RESET to bring you back to zero.

5) Changing of plan… – Something happened that requires a quick change of your plan (the most often one being moving to a 2 strike approach once you get 2 strikes on you)… – Change of plan… Environment has changed, we need to RESET here.

You don't have much time in between pitches to cool off, so if something upsets you, it is extremely important that you use a Mental Reset to keep your focus and get back to your plan. I think it is the same thing with trading… especially shorter time-frame trading. You don't have a lot of time to sit there and be upset. You have to RESET.

I thought you might find this parallel of Trading to Baseball interesting.

Cheers,

Alex

Thanks Alex. That is EXACTLY what I was talking about. Except your baseball analogy explains it just SO MUCH BETTER.

I called it a regroup (based on a term from my military days where a unit facing attack might drop back in order to reset and reorganise, in order to continue fighting).

Baseball calls it a mental reset.

The concept is the same.

When something has put your mindset on tilt then you need to step back away from the charts and reset or reorganise yourself, in order to return to the game with a clearer and more highly-focused mindset.

I've found this most effective when it involves a predefined and practiced ritual, such as my regroup checklist or Alex's routine for focus on the bat, slow breathing and reaffirmation of the plan.

To continue with the baseball theme, I'm reminded of a video which I shared a few years back.

The whole video is worth watching from a trading mindset perspective. But take note at 7:55 and you will see Evan Longoria complete his version of a mental reset.

(If the video is not playing here, click on this link to go direct to YouTube.)

Do you have a regroup or reset procedure?

If not, develop one now. Start with mine. Or adapt the baseball mental reset shared by Alex.

And then over time, amend it and make it your own.

As they say in the video, you need to have something to go to when the garbage hits the fan. Because the garbage will hit the fan. So let's be ready for it.

Happy trading,

Lance Beggs

 


 

Improving and Maintaining FOCUS for Day Traders

 

This is not for those who trade longer timeframes. If you trade the 15 minute chart or higher then you should NOT be aiming for constant screen watching all day. Set alarms to monitor price on completion of each trading timeframe candle. And price alerts to bring your attention back to the charts at key levels.

If you trade the 5 minute chart, perhaps you'll want a blend of the two. Alerts when price is well clear of potential setup areas. Screen watching only when there is potential for trade opportunity.

But below 5 minutes, you'll likely want to spend considerable time watching the price movement.

And for you, it's important that you develop a plan to achieve peak-performance levels of focus.

<image: FOCUS>

Photo by Stefan Cosma on Unsplash

Here are my thoughts:

Let's start by reviewing one of the key ideas in the article on discipline.

Read it here if you missed it: http://yourtradingcoach.com/trader/how-can-i-get-more-discipline/

In that article, I suggested that you can't "get more discipline". Discipline is actually an outcome. And it comes about through effective HABITS and STATE MANAGEMENT.

The same applies when we think about focus.

Focus is not something you can just get more of. Again, it's an outcome. And it comes about through HABITS and STATE MANAGEMENT.

We aim for habitual use of processes in our pre-session, during session and post-session routines, in order to establish a focused state. And to return quickly to the focused state if our mind should start to wander.

And we aim to place our body, mind and soul in as much of a peak-performance state as we can, in order to best maintain effective levels of presence, awareness and FOCUS.

So let's split this article into two parts, turning the idea of "focus" into a daily habit, and then ensuring effective state management.

Here's my plan:

Habits

1. The Power of Intention

There is nothing I've found more powerful in kick-starting my daily habit and ensuring disciplined focus than the power of intention.

This is a documented part of my pre-session routine.

It is simply a verbal statement of intent that "Today I WILL focus on the charts. I will not allow myself to open my browser for any non-trading purpose".

That is obviously set up for my most common distracter. "I'll just have a quick look at email and social media."

Adjust the statement to suit your own needs. But be sure to give it a try.

I can confirm through having monitored this as part of my review process, that days which begin with a verbal statement of intent are typically more focused than days when I did not make the statement of intent.

2. My Focus Statement

This is used during the session, whenever I have caught my attention wandering.

Here it is via a recent share on social media:

<image: FOCUS>

3. Regular Checks

Every 30 minutes I check my personal state. This includes an assessment on how effective I was in maintaining focus.

If particularly good or bad, I'll jot down some notes.

These then feed into the post-session review.

And if poorly focused, it's back to the statement of intent and the focus statement (above). 

4. The Focus Alarm

I don't always use a focus alarm. I find if used continuously that it tends to just disappear into the "background" after a while.

But from time to time, in particular if slightly fatigued, it has helped.

It's simply an alarm that goes off on the close of EVERY trading timeframe candle. It sounds a bit extreme. But it works. You can of course set it for longer if you prefer. Or shorter.

But it acts as a "wake up" to not only shock me back into focus if I've slipped away again, but also allowing me to "update" my market analysis with this new candle information.

I use SnapTimer, but there are dozens online if you don't like it.

5. Post-Session Review

The 30 minute notes on your ability to maintain focus are pointless if you don't review them.

So post-session… review them.

And then, if you were not particularly effective, aim to identify why and find a way to improve tomorrow.

State Management

1. Eliminate Distraction

Your mind cannot be focused if it's surrounded by multiple temptations or distractions.

The mind is NOT a multi-tasker.

Remove all distractions – social media, internet, phones, pets, kids, and whatever else acts to take your attention away from the charts.

For web browsers, you can find apps which block access to them during preset times each day. Keep one browser available though (not the one you usually use for surfing). If your platform goes down or you get other tech issues, you're going to want some way of getting online quickly.

2. Adequate Rest

Set a minimum standard for rest. And stick to it.

See here for mine – http://yourtradingcoach.com/trader/trader-fatigue-management/

3. Adequate Hydration

There's a water bottle just off to my right. Always accessible.

Essential.

Get one for your trading room if you don't have one.

4. Physical Health

This kind of goes without saying. If you struggle with focus, exercise better and eat better. Simple!

You will notice improvement in all areas of your life.

5. Relaxation processes

I have regular breathing routines from back in my Tai Chi & Chi Gung days.

If you don't, Google search it.

Find some exercises to relax the mind, body and soul.

6. Stimulants

Coffee pre-session. To be honest I'm not sure on the science of this one. It is effective for me, given the night hours I trade. But not too much. One a half-hour before trading seems to help me. Give it a try.

I have a glucose lolly pre-session. And then a second during the session if I feel a bit flat. See here – http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html?pagewanted=all

I've heard chocolate helps. But maybe I'm making that one up because, you know, chocolate!   🙂

I've heard blueberries are good for a sharp mind. Give that a try if you're not a fan of chocolate. (Send me your chocolate!)

Chewing gum, while not exactly a stimulant, seems to work well in dissipating any nervous energy that can act as a distraction.

7. Regular Breaks

Always aim to spend a few minutes every half hour AWAY FROM THE DESK.

Get up. Stretch. Go for a walk. Whatever you need.

Just get away from the charts to reset your mind.

8. Regular Exercise

Consider incorporating this into your breaks.

Nothing gives you a "wake up" quite as effectively as a short, sharp burst of exercise.

9. Background Music

Nothing with lyrics. EVER.

But experiment with background ambient music, binaural beats or isochronous tones. Or whatever works the best for you.

It's a process of trial and error. Add this to your post-session review until you find a number of preferred solutions.

10. Standing Desks

I don't have one right now due to the current layout of my trading room. But I've used this in the past to great effect.

Seriously, it works incredibly well.

Raise your desk. And stand back a bit, out of arms reach of the keyboard and mouse.

Step forward ONLY when it's trade time.

It's just you and the charts. Absolutely NO WAY to click on that web browser, even if you wanted to.

If Nothing Else Works

I've yet to see a trader try this but it looks like it has potential.

– – –

Well that just about wraps it up.

What have I missed?

If you have any tips or techniques which you've found effective for improving or maintaining focus, let us know in the blog post comments.

Best of luck,

Lance Beggs

 


 

Trading Alongside the Uncertainty and Fear

 

I shared the following post via social media on Wednesday:

<image: What if it's ok to feel uncertain?> 

Without doubt, this is one of the key lessons we must learn on the way to becoming a professional trader.

And so I was incredibly pleased to get the following reply:

<image: What if instead we learn to operate alongside the uncertainty and fear?>

Brilliant!

Thanks A.H.

This is exactly the right approach to the presence of the fear and doubt.

1. Recognise the emotion.

Just briefly, bring your focus back from the external (charts) to the internal (your body and mind). Notice what you're feeling.

2. Acknowledge the emotion.

Accept it. You can't fight it. You may as well welcome it.

If it helps… verbalise it.

3. Understand the emotion.

What is it trying to tell you? There is information there. Find it!

4. Review the trade premise.

Often you will find that steps one to three will significantly reduce the severity of emotion.

So the final step – review the trade premise from an objective chart-based perspective.

With the emotion acknowledged and diminished, does the trade premise actually contain edge?

If so, go for it.

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

If it helps, consider creating a "pre-entry mantra" to shift your focus inside and recognise, acknowledge and understand any emotion that may impact upon your trading decisions and actions.

With experience (and of course proper risk control) fear and emotion will reduce. But it never completely goes away.

You can't fight it.

Accept it. And learn to work alongside it.

Happy trading,

Lance Beggs

 


 

Employing a Self-Distancing Strategy to Improve Journaling and Review

 

Close your eyes and imagine a really bad trading session. You might have a recent example you can use. Or if not, just make one up.

The details don't matter. They'll vary for each of us. Just make it bad.

Maybe this:

"I drag myself into the office and throw my bag on the floor. Feeling crap with a hangover and too little sleep due to last night's celebrations. It's 10 minutes till market open. No problems. I'll catch up on the pre-session admin later and just wing it. I'm on my third coffee already – this should help me make it through ok."

The market opens and drives higher with strength. "Suckers… it's right into resistance. I'll short here and catch the move back down to the market open."

Of course, it loses!

As does the second attempt. And the third. And the fourth, which had the stop pulled even higher, because "this damn thing is so overbought".

Or maybe your example is something much worse.

Whatever it is, close your eyes and visualise it. And feel every feeling that such a session would bring.

Disgust! Anger! Frustration!

Now, the session is over. You've smashed your keyboard and it's time for review. Close your eyes and imagine yourself critiquing your performance.

SERIOUSLY!

Close your eyes, visualise this scenario. And then critique your performance.

Now let's shift the scenario slightly.

This time the session went exactly the same, but you weren't the trader. The trader was the person you most love in life. Your partner. Your Mum. Whoever you care the most for.

And you're their coach. The person they come to after each session to discuss their performance and to plan the way forward.

Close your eyes and imagine how you would handle their performance review.

Visualise it.

Feel it.

If you've been honest with yourself, it's likely that the first scenario would have been far more emotional. Quite likely an explosive, self-critical and self-deprecating review.

Whereas the second, while still noting that the performance was unacceptable and must lead to change, would likely be more calm and rational. With a more considered review of both the reasons for the poor performance and the solution that is necessary to prevent recurrence.

This simple shift in the scenario has created some space, or distance, between our rational mind and the emotion associated with the trade performance.

 

Self-Distancing Strategies

I absolutely love this article by Brad Stulberg in NYMag.com:

http://nymag.com/scienceofus/2017/02/self-distancing-will-help-you-make-smarter-deciions.html

Please read it. It will take about 10 minutes, tops.

Some key excerpts:

  • Collectively referred to as “self-distancing,” practices like those outlined above and Rusch’s “pretend you’re talking to a friend” allow us to remove our emotional selves from intense situations, paving the way for more thoughtful insight and subsequent decision-making.
  • Employing a self-distancing strategy allows you to evaluate activities or situations that are rife with passion from an entirely different perspective, one that includes logic alongside emotion.
  • “I talk to myself all the time,” says Rusch. “It’s just that when I talk to myself as myself, I tend to be negative and not so helpful. But when I talk to myself as if I were talking to a friend, my words are motivating, forgiving, and far more productive.”

 

Employing Self-Distancing Strategies to Improve Journaling and Review

I will be employing these ideas in two ways:

(1) Journaling

Here's another excerpt from the article:

  • Similar studies show that when individuals think, or journal, in the third person rather than in first person — for example, “John is running into challenges with his business that seem insurmountable” versus “I am running into challenges with my business that seem insurmountable” —they, too, evaluate themselves and their situations more clearly and with more wisdom.

 

I now journal in the third person.

Give it a try for a month. You can always go back to normal if you don't like it.

(2) Reviews

All reviews (session reviews and longer term reviews) will now be conducted as if I am the "Performance Coach" reviewing a trader within my firm.

Again, give it a try for a month. You've got nothing to lose.

And if you can separate your rational and logical side from the emotion of the session, just a little, there is a WHOLE LOT to potentially gain.

 

Why Not Get Started Right Now?

That trading you did so far this year is no longer yours. It was done by your best friend, your partner, or some other loved one.

You are now the performance coach.

And it's time for you to honestly review their trading business.

Close your eyes and imagine the review session. And answer the following questions.

  1. Did they approach these recent months with clear and realistic goals for growth and development?
  2. Did their performance drive them successfully towards achievement of their goals?
  3. Are the goals still appropriate, or do they need amending?
  4. What action must be taken in the coming months to take decisive steps forward?

 

Calmer. More rational. More logical.

And far more likely to lead to practical and effective decision making.

Give it a try!

Happy trading,

Lance Beggs

 


 

If You Suffer From Too Much Impulsive Trading…

 

The following was a social media post that I sent out just before my trading session on the 6th of February.

It was my first session following a two week holiday… and I was more than keen to get back into the markets.

If you suffer from too much impulsive trading... 

Click on the image or this link here if you wish to read the article – Patience is a Key Component of your Edge.

It was a simple reminder to myself that:

  • The real source of my edge is not in my strategy, but in ME.
  • Patience plays an important part in realising that edge.
  • And most importantly – I don't have to trade every price sequence.

 

In other words… knowing that I'm susceptible to emotional, impulsive trading when I first come back from a break, I reminded myself to slow down. And wait till I was truly in sync with the market.

As I write this it's now the 21st of February. It's the first trading day following a long weekend. I'm keen to trade. I'll be giving myself the same reminder pre-session.

And again next week. I'll be admitted to hospital next Tuesday for some very minor day surgery (nothing to worry about). But I'll likely need a day or two off trading as I recover. Again, I'll be giving myself this same reminder.

Slow down. And wait till I'm truly in sync with the market.

HOWEVER…

This is not all I do.

There is a simple "hack" which I've used for a few years now which provides exceptional help in overcoming my impulsive desire to trade.

I've thought about sharing it a few times, but to be honest it seems so obvious that I thought it would be a stupid topic for an article. My stats clearly show that readers prefer charts… and this is not a chart.

But it's so important. And such a great help. And given that I'll be applying the hack again today… I figure you should get it too.

This will be of most relevance to short timeframe day traders; those of us who "screen watch". But the general concept can be adapted for use by longer timeframe traders as well. We'll talk about that later.

Interestingly, there has been some exceptional discussion on this topic in other blogs in recent weeks. I'm not going to duplicate their advice. It's great work and you should go directly to their blogs to read their suggestions and solutions.

http://www.smbtraining.com/blog/a-solution-to-improve-your-patience-as-a-trader

http://tradingcomposure.com/traders-impulsivity/

Visualisation, meditation, mindfulness, and all the other methods discussed… they're very important and a key part of your solution. I particularly LOVE the technique provided by Dr Steenbarger, in the SMB Training link. I'll make you click to get that one! (Ha ha).

But I was surprised to see that my little impulsivity hack was not presented.

So here we go.

What is the solution? How do I reduce the likelihood of emotional, impulsive reaction to price movement?

I create a physical barrier between my desire to trade and my ability to execute.

If you suffer from too much impulsive trading...

In other words… I step back about a metre and conduct all analysis out of reach of the keyboard and mouse.

I know… right!

LAME!

No, seriously. Work with me here.

The key problem is NOT our impulsive desire to trade. It's the fact that we react to that desire by clicking the mouse and entering.

The solution is to put a barrier in place. Something that forces a break between your desire to trade and your ability to enter.

It does not need to be a massive barrier. This solution is about as small a barrier as we can get. It's simply space. And only one metre. But it's enough.

  • Step back from the keyboard and mouse.
  • Conduct your analysis.
  • When you feel that desire to trade, don't. You can't reach it. And you're not allowed to step forward. So just pause and reassess.
  • And ONLY step forward once that pause and reassessment screams out, "Yes! This is the opportunity I've been waiting for. This is an A+ setup. This does provide edge."

 

Discipline and patience are not just a function of willpower. You can create physical barriers to limit impulsive trading.

A physical barrier between your desire to trade and your ability to execute.

Just a small barrier. But just enough to have you pause and reassess.

Longer timeframe traders… clearly stepping back one metre is not likely to help you. After all, you've got a lot of time to make decisions anyway. But the same concept applies – adjust your environment to provide a barrier between decision and execution. One possible solution – conduct your analysis and trade decisions on a separate platform that does not allow execution. Once trade decisions are made and written down, open up your broker's execution platform and reassess the quality of your decisions. Only enter if they're still A+ ideas.

I'm sure you can find other solutions that better suit your particular trading setup.

The key concept applies though, regardless of who we are and how we trade – create a physical barrier between your desire to trade and your ability to execute.

It's not a full solution. See the links posted earlier for some other key parts in managing impulsivity. But it's a simple "hack" that I've found to be exceptionally effective.

I'll be using it tonight, as I trade the first session back after a long-weekend.

I hope you find the idea effective as well.

Happy trading,

Lance Beggs

 


 

Fighting to Regain Losses

 

I had an interesting email exchange with a trader a couple of weeks ago, who is struggling with occasional massive losses.

email excerpts

email excerpts

I've had the opportunity to speak to a LOT of traders over the last 8 years of writing these articles. You'd be surprised at how common this problem is.

We discussed several options to investigate further, related to money and risk management, strategy, and of course psychology.

What I wanted to share with you all today though, was just one simple concept that might help, should you ever find yourself suffering from a similar problem.

It's just a slight shift in mindset. It may not be easy. It certainly won't be the full solution. But it could well play a part in overcoming the problem.

Here is what is happening right now:

The current plan

I get it.

Losing sucks. We don't want to lose.

And even more than losing, we don't want to admit we were wrong.

So we fight! We double down on our earlier decision, hoping, wishing and praying that the market will turn. Just enough to get us back to breakeven.

There is a problem though.

IT'S NOT WORKING.

You said that yourself!

But it's not working!

Sure, sometimes it will work out just fine, but it's only a matter of time till the market provides another extended drawdown which takes you out of the game.

Your current money and risk management plan provides you with NO EDGE.

And here's a key part of the problem:

Here is part of the reason why...

Let's repeat that for effect!

  • When you FIGHT to get back to breakeven, you're doing so at a time when the market environment is NOT working in your favour.

 

Seriously!

You're fighting against a strong and persistent trend!

I'm not saying don't fight. But if you're going to fight to get back to breakeven, let's see if we can do it a bit smarter. Let's rethink this concept.

Let's break the current plan into three stages.

The current plan (in stages)

What if we planned our fight differently?

A better plan

Use HOPE as the trigger.

Any time you find yourself HOPING that an extra "unplanned" entry might just help you get out at breakeven… EXIT.

Take some time out to clear your mind.

And resume the fight at a time and place when the market movement and price conditions are IN YOUR FAVOUR.

Don't make this game any harder than it needs to be. Fight to regain losses at a time and place of YOUR CHOOSING.

It's the same challenge; taking a drawdown back to breakeven and maybe even positive territory. But you're doing so when the odds are more in your favour.

And even if four out of five times the market would have got you out at breakeven, had you just entered one more time, ignore it. Remind yourself that averaging down has proven to have NO EDGE. Because the fifth time will not only blow out to a huge loss, but will also take away all these previous gains.

If you're going to fight to regain losses… do so at a time and place of YOUR CHOOSING.

Step aside. Clear your mind. And resume the fight at a time and place when the market movement and price conditions are IN YOUR FAVOUR.

It's just a slight shift in mindset. But it can make a really big difference.

Good luck,

Lance Beggs

 

PS. A pro-trader will NEVER EVER let a single trade, or a sequence of trades, take them out of the game. Always, before any other goal, your priority is to survive to trade another day. If your current money management plan involves adding to positions just based out of hope and fear, then your money management plan sucks. Fix it. Or you're unlikely to last long in this business.

 


 

Why Did I Not Enter Short on Rejection from Resistance?

 

This short article is to share some excellent Q&A following our recent series on "patience".

Check out the prior articles if you missed them:

Part 1 – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-1/

Part 2 – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-2/

In particular, it relates to last week's trade sequence:

Patience - you don't have to trade every price sequence

 

Q. Why did I not enter SHORT on the initial rejection of session high resistance?

Patience - you don't have to trade every price sequence

I was really happy to get this question. It shows people are thinking!  🙂

Here's an excerpt from the email:

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A Tactical Withdrawal

 

This short article is to share some excellent Q&A following our recent series on "patience".

Check out the prior articles if you missed them:

Part 1 – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-1/

Part 2 – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-2/

In particular, it relates to the period of "emotional reaction" in last week's trade sequence:

Patience - you don't have to trade every price sequence

 

Q. Won't I be annoyed if I don't take a third attempt short and the market moves lower without me?

So this is what we're talking about here:

This is what happened

But what if this happened

Would I be annoyed?

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Patience is a Key Component of your Edge (Part 2)

 

Last week we discussed the idea that PATIENCE plays an important role in trading.

A key component of edge comes from recognising and accepting that you do NOT have to trade every price sequence.

When the bias is unclear, stand aside or trade another market.

When the pace of price flow is too fast or too slow for your liking, stand aside or trade another market.

When the price action is choppy rather than flowing smoothly, stand aside or trade another market.

And we looked at an example in which I waited on the sidelines for over an hour, before finding price movement that was screaming out to be traded. Good pace, good structure and easier to read. Something that I felt nicely in sync with.

Patience - you don't have to trade every price sequence

Check out that article first, if you missed it – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-1/..

So I closed out that article by promising that we would discuss another session in which I did not act with good patience, but instead reacted emotionally and chased opportunity where there was none.

In fact, it happened the day immediately following our prior example.

The session started in a quite similar fashion with a strong bearish drive. My expectations were exactly the same – look for PB/CPB trade opportunity.

Patience - you don't have to trade every price sequence

YTC Price Action Trader references:

The First and Second Principles – Volume 2, Page 145-148

The PB & CPB Setups – Volume 3, Pages 34-40

The market pulled higher to offer the first trade entry.

Patience - you don't have to trade every price sequence

I should have got it. But I didn't.

That's fine. Let it go.

Let's see what follows…

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