Hi Traders, welcome back to another workshop. I believe this is a very common struggle within our community as a Trader. Often when you take a loss on a particular setup, the urge of getting back into the market is intense, and that's human psychology.
Do you realized how focused and how biased you are when you are hunting for a specific setup?
- Get stopped out once, you'd still take it because it doesn't do any damage to your account
- Get stopped out twice, you'd still arguably take it because you allow yourself for a re-entry
- Get stopped out thrice, now your emotion is taking over your rational behaviour. Now all you're focusing is either "How can i make my money back?!" or "I MUST be correct" or "This cannot be ..."
Familiar?
Remember, trading is not so much about Yes or No. It's all about measuring the Risk-to-Reward VS Probability of Success. If a setup is so valuable that you cannot afford to miss it (assume it passed through your trade evaluation process), feel free to take it again and again. But if you're trading the P&L, then i'd suggest you to only allow yourself a maximum of 2 chance entries, meaning that if you're getting stopped out twice in a row in a similar setup, you should probably get some rest or trade the other markets.
Most of the time, when a trader gets stop out multiple times in a row trading a similar setup, the emotion kicks in. Now their trading lens is no longer focusing on finding the best setups, but rather 'this must be it'. That's also how the over-trading and revenge trading behaviour pops out.
Let me know your thoughts below.
If you enjoy the content, make sure you follow my profile and give me a thumbs up for daily fx forecast & educational content.
Do you realized how focused and how biased you are when you are hunting for a specific setup?
- Get stopped out once, you'd still take it because it doesn't do any damage to your account
- Get stopped out twice, you'd still arguably take it because you allow yourself for a re-entry
- Get stopped out thrice, now your emotion is taking over your rational behaviour. Now all you're focusing is either "How can i make my money back?!" or "I MUST be correct" or "This cannot be ..."
Familiar?
Remember, trading is not so much about Yes or No. It's all about measuring the Risk-to-Reward VS Probability of Success. If a setup is so valuable that you cannot afford to miss it (assume it passed through your trade evaluation process), feel free to take it again and again. But if you're trading the P&L, then i'd suggest you to only allow yourself a maximum of 2 chance entries, meaning that if you're getting stopped out twice in a row in a similar setup, you should probably get some rest or trade the other markets.
Most of the time, when a trader gets stop out multiple times in a row trading a similar setup, the emotion kicks in. Now their trading lens is no longer focusing on finding the best setups, but rather 'this must be it'. That's also how the over-trading and revenge trading behaviour pops out.
Let me know your thoughts below.
If you enjoy the content, make sure you follow my profile and give me a thumbs up for daily fx forecast & educational content.
