Ask About This ArticleWhen a trade goes bad, poor traders will start thinking about what to do to salvage the situation: “Should I just cut my losses now? Or should I remove my stop-loss trigger because I’m sure the market will turn around soon?”
Either way, this is the wrong way to trade. Thinking during a trade is one of the most efficient ways of getting eaten by the market.
You should do all your thinking and analysis BEFORE entering into a trade. After you enter into a trade, the only think you’ll need to do is to follow through with your initial trade plan.
Before you entered, you were cool, calm and thinking logically. Your judgment was balanced and fair. You know that prices could go up as easily as it may come down. And you’ll take the trade with the highest probability of winning.
During the trade however, you’ll be constantly bombarded with conflicting emotions that try to influence you to abort your original trade plan. “I made a mistake… I should cut my losses now!”, or “This is just a temporary market correction, prices will soon turn around again in my favour.”
You’re constantly under pressure during a trade, which clouds your ability to make good decisions. You will almost always make better decisions with a clear, calm mind than when you’re under stress.
You did your homework and analysis before you entered into the trade, didn’t you? Don’t doubt yourself and change your original plan. If you made a mistake, so be it. Learn from it and improve. But never abort your trade plan… you may turn out to be right after all!
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of http://ForexSystemProfits.com where he provides premium Forex trading information and resources.
Tags: decisions, mistake, homework, probability, wrong way, doubt, losses, salvage, judgment, stress, favour, forex traders, stop loss, traps, calm mind, first three months, trading accounts, hsu
