Order Entry Error – Again

 

I seem to average an order entry error maybe once every two months. That's not too bad considering entry is via a single click. But it's something I will continue to work at improving.

In the meantime, it's an opportunity to again present my ideas on how to best manage those times when you somehow find yourself trading in the wrong direction.

Those times when order entry gives way to confusion, as things just don't look right, and then to shock as you realise you're short when you expected to be long (or vice versa).

Common advice is to IMMEDIATELY hit the CLOSE button. Accept any loss (or bonus profit). It's not part of your edge so you have no business trading it. Then try to get back in; this time in the right direction.

If you want to do that – fine. There are no problems with this.

I prefer something a little different. Maybe the idea will appeal to you as well.

The general idea is to use your skill to make a real-time contextual risk management decision. You can do this. Your brain is better at pattern recognition than you realise.

• Is the position in immediate threat? (ie. Is price likely to continue to move against you?)
• If so, then exit immediately
• If not, then see if you can actively work a better exit, or even turn it into a profitable trade.

 

Think of it this way. What percentage of your trade ideas lose?

50%, 40%, 30%?

Whatever it is, there's a reasonable chance that this trade idea could fall on the losing side.

Which means, now that you're trading in the wrong direction, you might actually be able to get a profit.

Low odds perhaps. But you've found yourself in this situation. So why not try to turn it into a positive.

Don't jump straight for the CLOSE button if there is no immediate threat.

Pause. Assess the situation. And allow yourself to make a real-time decision as to whether to close or whether to manage any further risk and opportunity.

Here's the trade idea:

Reference for CPB setup: YTC Price Action Trader Vol 3 Ch 4 P38

Use your skill to make a real-time contextual risk management decision.

• Is the position in immediate threat? (ie. Is price likely to continue to move against you?)
• If so, then exit immediately
• If not, then see if you can actively work a better exit, or even turn it into a profitable trade.

 

Happy trading,

Lance Beggs

 

---