There is one thing which without fail will turn any winning trade into a liability. That is missed Exit opportunities.
Time and Time again, It is possible to have a trade be doing everything right but still not be profitable long term. There're many reasons for this but the basic reason for this is missing or insufficient data.
If an individual is lacking data or understanding about a topic or area. He will not produce the desired results.
The nature of the markets are such that they will always create retracements (A specific form/pattern in the market where a down trend or uptrend will reverse temporarily before continuing the trend)
From experience it is possible to now say this about retracements. This should be firmly implanted into the mind of any aspiring trader to the point that it should be an axiom of trading.
This Axiom is: It is impossible to tell whether the markets are retracting or reversing until after the fact.
What that means is that it is impossible to know if the markets are preforming the temporary manoeuvre or retracing (Reversing temporarily before it continues in its original direction) or reversing ( completely changing its direction to go back from whence it came)
It is a losers game to try predict this on an active trade.
The best and only course of action is adjusting your stoplosses. As price moves through time it doesn't just create entry opportunities but also exit opportunities.
Your ability to identify both will determine your overall profitability.
An individual who refuses to move his stoploss to a potential exit opportunity is turning all his winning trades into liabilities. As profits are not profits until they're secured. This can be another axiom of trading.
An exit opportunity is defined as a proven retracement where price has continued downwards past the point where it originally started to retrace on any timeframe.
The exit opportunity is afew pips above this retracement.
It takes good judgement to identify the best place to place your trailing stoploss and what time frame would be best suited to make this judgement.
However any placement is better than no placement.
By missing potential exit opportunities you are losing. You start to play the game of "hope". You hope that price will continue in your favour. You hope that you make the right decision. Hope doesn't generate profits.
I'd rather be upset because I exited to early rather than be upset that I didn't exit early enough. I find that the former tends to be more profitable.
Opmerkingen