Currency Trading Information Channel |
|
|
|
Stopping YourselfI read on a bulletin board a traders comment that on his first outing trading the E-Mini S&P 500 he lost on each of his trades. He noted though, that had he had a wider stop each of his trades would have been profitable and that therefore he would be trading with a wider stop in future. A wider stop on these particular trades may have worked, but this does not mean that a wider stop per se is the answer. In fact, everyday there is the possibility of any given trade going into profit if given enough room, but that does not a wise strategy make. This trader was a seller in a market that subsequently went down; hence he could see that had he given his position a bit more room he would have made a handsome profit. Unless this trader has the ability to always accurately predict the direction of the market he is going to experience days where he is wrong and the market goes against him, in which case his potential for loss with wider stops is greater. When deciding an appropriate amount to risk on any trade (i.e. size of stop) a trader has to consider more than the potential profit on a particular trade on a particular day. What this trader was saying to himself was 'If I had a 3 point stop instead of a 1 point stop, I could have made 15 points; therefore I will always use a 3 point stop!' Partly what he was saying to himself was 'I was right!' But he wasn't right; in the time frame of his trades and within the risk limit of those trades he was wrong, his timing was off and that is what he needs to work on. He is also making two assumptions: 1) That having a bigger stop and therefore bigger open losses will not affect his trading composure and performance (how do you feel if you are risking $10?? $100?? $1000?? $10,000?) 2) That he would have held on to his profitable trade until he gets an exit signal (it is easy to assume after the event that we would have got out at the very best moment) The truth is we are all much weaker than we would like to assume. The biggest challenge to profitable trading is sticking to our own self-imposed loss limits, be they on a per-day or a per-trade basis. What this trader did on this day was stick to his limits, which is highly commendable; he was just having difficulty accepting his results. No one likes losing money and no one like being wrong, but to be successful in trading we have to be accepting of both. Malcolm Robinson
MORE RESOURCES updated Thu. March / 28 / 2024 Stock market today: Asian shares meander after S&P 500 sets another record The Associated Press Stock market today: World shares are mostly higher after S&P 500 sets another record - Yahoo Finance Yen traders on tenterhooks — TradingView News TradingView Foreign exchange contact group (FXCG) European Central Bank Stock market today: Asian shares trading mixed after Wall Street's momentum cools San Francisco Chronicle Rupee falls 6 paise to settle at 83.39 against US dollar The Economic Times 3 Best Forex Brokers for 2024 NerdWallet Forex Today 28/03: Fed's Waller: Slow on Rate Cuts, No Hikes DailyForex.com USD/PKR Analysis Today - 28/03: Steady USD/PKR Trend (Chart) DailyForex.com EUR/USD Analysis Today 28/3: Pressures Ahead (Video) DailyForex.com Yen steady after intervention warning, dollar dips Yahoo Finance FOREX.com vs. Robinhood: Which Is Right for You? The Motley Fool Stock market today: Wall Street ticks quietly higher ahead of consumer confidence report The Atlanta Journal Constitution U.S. dollar closes lower on Taipei forex market Focus Taiwan This Is How You Make Money Trading New York Magazine Best Forex Brokers In March 2024 Bankrate.com Europe Playing Bigger Cryptocurrency Role ETF Trends Euro FX EUR/USD Overview CME Group EUR/JPY Forecast Today - 28/03: Euro Dips vs Yen (Chart) DailyForex.com Towards Increasing Complexity: The Evolution of the FX Market - Liberty Street Economics Liberty Street Economics - Forex Trading for Beginners NerdWallet Why Is the Forex Market Open 24 Hours a Day? Investopedia GBP/USD Signal Today - 28/03: Pound Risk Pre-PCE (Chart) DailyForex.com Rupee turns flat at 83.33 against US dollar amid high crude oil prices Business Standard Rupee trades in narrow range against US dollar in early trade The Economic Times EUR/USD Analysis Today 27/3: Tight Range Trading (Chart) DailyForex.com China's New Currency Playbook Council on Foreign Relations How Often Do Exchange Rates Fluctuate? Investopedia BTC/USD Signal Today - 28/03: Cup & Handle Pattern (Chart) DailyForex.com Forex Today - 27/03: Japanese Yen Hits 34-Year Low DailyForex.com Trader's Case Tests DOJ's Policing of Global Currency Market The Wall Street Journal GBP/USD Analysis Today 27/3: Continues Bearish Trend (Chart) DailyForex.com FX Swaps vs. FX Forwards - The Difference & Comparison DailyForex.com USDBRL Analysis Today - 26/03: USDBRL Range Reversal (Chart) DailyForex.com USD/MXN Analysis Today - 25/03: Bearish USD/MXN (Chart) DailyForex.com How can blockchain platforms make currency trading cheaper? Financial Times USD/SGD Analysis Today - 26/03: USD/SGD Reflexive Range DailyForex.com USD/JPY Analysis Today 25/3: Central Bank Policies (Chart) DailyForex.com Forex Today-26/3: Cocoa Futures Break $9,000 for Record High DailyForex.com Trading Costs - Trading Charges FOREX.com EUR/USD Analysis Today 26/3: Dollar Remains Strong (Chart) DailyForex.com EUR/GBP Signal Today - 28/03: Euro vs Pound Tussle (Chart) DailyForex.com USD/JPY Analysis Today 27/3: Strong Move Ahead (Chart) DailyForex.com
|