By Sophia Todorova– Sophia is the trading room host for the London session at Winners Edge Trading. She is good at finding reversal trade setups. Join our service to trade live with Sophia.
It is 2am, you’re desperately surfing through your charts for a trade setup. The logical side of your brain is telling you to stop and think. There are none of your usual set-ups, but you need to trade. You need to trade because you have recently had a string of bad trades, and need to make it right again. So you scroll from chart to chart looking for some trade setups. You do this for several minutes, still nothing. You convince yourself that opportunities must be there; you just weren’t looking hard enough.
A few moments later, like a mirage in the desert, you begin to see numerous trade opportunities, that you had somehow overlooked before. You put a few trades on, feeling the excitement pounding through your veins.
As you sit there, watching each bar slowly tick its way into profit, you feel justified in having taken the trades and begin to identify where you would like to lock in some profit as soon as you have gained some more pips. Suddenly, in a flash, your positive pips are gone and you are now in the red, deeper and deeper, with your stop loss appearing excruciatingly vulnerable. You’re wondering how it could be possible for all of your trades to have turned against you in this manner.
You sit there immobilized. The trades are now at a point where you can no longer hold out any rational hopes of them turning around again. You know you should close out but you hesitate. As if paralyzed, you sit there, watching your stops getting hit one after the other.
You are so mad about what just transpired; you feel your blood boiling. Luckily your dog didn’t decide to come around just then.
The above scenario, though exaggerated, is depicting a situation in which the individual has forced himself into trades, despite not having found any solid trade setups. It was my intention to attempt to capture the raw emotions that tend to get exposed in our trading, and how helpless and vulnerable we can feel and become in such situations.
The following are some suggestions which may help in reigning ourselves in whenever we get the urge to jump into trades for which we are not prepared:
* Having a well thought-out trading plan: The very act of deliberately thinking through a trade idea and making a plan, tends to eliminate impulsive trade decisions that are not clear to you. A trade choice can be wrong for you, while at the same time offering someone else a profitable opportunity. The success of any trade depends largely on the comfort level of the trader executing the trade. If you are going to be taking trades that vary from your usual strategy, ensure that you are comfortable with the technique, and not just using it as a last resort when your usual setups are absent
* Refrain from constantly checking your charts for trade setups, particularly if you are a longer-term position/swing trader. For example, if you use the 4hr or daily timeframes to identify your trade setups, it is highly unlikely for you to find a new setup fifteen minutes after your last check. This point will obviously exclude scalping trades, as these setups can occur in quick succession.
* Take a break from your desk to stretch your legs, and, if possible, to get some fresh air periodically. This is one of the more frequently-mentioned suggestions that we tend to make when addressing the trader’s well-being. However, I do not believe that it can be over-emphasized. Taking a break from your charts, even if only for a few minutes, does wonders in helping you to really see the charts from a neutral perspective upon your return.
* Trade with a partner: Again, this suggestion will not suit everyone; but if you enjoy having someone with whom to bounce around trade ideas, then you will be happy to know that doing so can assist in preventing you from making rash trade decisions. This person ideally, will be another trader who generally uses the same approach as you do.
- Keep reminders, such as your trading rules within plain view, so that you can easily refer back to them, or have their mere presence serve as an inhibitor to your giving in
to your trading impulses.
Remember, it is highly unlikely that you will be performing at your best, if you feel pressured, whether by your own expectations, or by others around you, to produce certain results.
I would love to hear any feedback you as a trader might have regarding how you retain focus in your trading at times when you might have encountered this ‘need’ to trade.
‘Till Next Time… Trade Safely