This post kind of piggy backs off of my last one titled 12th round knockout. But again I want to stress the importance of being able to stay mentally tough in the market. A good friend of mine is showing interest in becoming a trader so he's been asking me a few of questions about the new material that he is learning. And yesterday I remember telling him that there are a million ways to trade the market but they all mean nothing if you don't have the right trading psychology and strategy. This was my issue when I first began trading. I knew tons of techniques but didn't know how to consistently trade them correctly, nor did I have the mental ability to see them through. I took winners off early and let loser run to far, making for a disastrous combo. During my first conversation with my trading coach Jason (http://www.triplethreattrading.com/) he was able to pinpoint my exact flaws.
In this trade here (see chart below) I entered a buy order at the 78.6 retracement predicting that this would lead to a patter completion. I also saw a heck of a lot of support at the bottom and knew that the profit target well outweighed the risk. The trade hit my order and immediately shot up almost hitting my first target. As I saw this I let out a big sigh of relief, I mean who doesn't enjoy a painless trade. However the end of that candle and the next proceeded to drop right back down putting me back to break even and then into the red. You can see the rest by the chart about how it sunk, continued to play around for a few days, and then shot straight up earning me a good profit. I owe staying in this trade to two things.
First, my ability to place a correct stop order. I was taught that the market will try to stop you out so when placing a stop, you need to use a logical technique instead of just saying "ehh I'm just going to put it at 20pips because I don't feel like losing that much", or because that number equals 3% risk in your account. One you understand how the market works you'll be able to understand where it wants to go, and what structure is going to try and protect it. My stops on this trade were below the obvious structure, including that long wick, and guess what the market never broke it. It came close, but it held.
The second key of this trade deals with what I talked about earlier, being mentally tough. Honestly I'd rather watch a trade go straight into the red rather than shoot up and down. But that's the name of the game. A few weeks ago I had a similar situation and I moved my stops up only to be taken out for a small loss. But then the market proceeded to rally without me. This time I was determined not to make the same mistake twice. I stuck to my guns as I should and it paid off. And is still paying off.
I apologize for any errors, I'm rushing this one out this morning. Hope you enjoyed it.
In this trade here (see chart below) I entered a buy order at the 78.6 retracement predicting that this would lead to a patter completion. I also saw a heck of a lot of support at the bottom and knew that the profit target well outweighed the risk. The trade hit my order and immediately shot up almost hitting my first target. As I saw this I let out a big sigh of relief, I mean who doesn't enjoy a painless trade. However the end of that candle and the next proceeded to drop right back down putting me back to break even and then into the red. You can see the rest by the chart about how it sunk, continued to play around for a few days, and then shot straight up earning me a good profit. I owe staying in this trade to two things.
First, my ability to place a correct stop order. I was taught that the market will try to stop you out so when placing a stop, you need to use a logical technique instead of just saying "ehh I'm just going to put it at 20pips because I don't feel like losing that much", or because that number equals 3% risk in your account. One you understand how the market works you'll be able to understand where it wants to go, and what structure is going to try and protect it. My stops on this trade were below the obvious structure, including that long wick, and guess what the market never broke it. It came close, but it held.
The second key of this trade deals with what I talked about earlier, being mentally tough. Honestly I'd rather watch a trade go straight into the red rather than shoot up and down. But that's the name of the game. A few weeks ago I had a similar situation and I moved my stops up only to be taken out for a small loss. But then the market proceeded to rally without me. This time I was determined not to make the same mistake twice. I stuck to my guns as I should and it paid off. And is still paying off.
I apologize for any errors, I'm rushing this one out this morning. Hope you enjoyed it.
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