A Bunch Of Questions To Consider

For those who have been trading for awhile, you may ask yourself questions like:

1. Why didn't I set my stop?

2. Why did I have such a far stop?

3. How do you set good stops?

4. Should I use a trailing stop?

5. Why didn't I see that pattern forming?

6. Why did I stay in that trade when it went against me?

7. Can someone make money trading?

8. It all looks so easy after the fact, but how do I know what direction it's going to take?

9. Why do I seem to always be going the wrong direction?

10. I do so well in practice, but can't seem to do it in real life. What's the issue?

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Let's answer each question:

1. Why didn't I set my stop? Perhaps you had "hope". I'm a woman of great faith, but in trading, even with my faith, "hope" rhymes with "dope". Don't be a dope. It is NEVER a good idea to trade on "hope". A part of good trading is managing your risk. Setting your stops IS a part of risk management, but not all of risk management.

2. Why did I have such a far stop? Placing stops is an art. Some people have a 10% or 15% rule. Others scalp or take so many points or ticks or dollars or whatever. As a trend trader, I set my based upon my trends, usually just within to take profits and just outside to take costs. Usually in greater timeframes (meaning if you trade 1 min., you will have stops closer than if you use a 30 min. chart). You have to be able to weather this, if you're a trend trader.

3. How do you set good stops? This is an art, like I said before. This is an acquired skill, which requires you to practice. It's advisable you practice in a real-time practice account instead of with real money. Get it down first and then use real money, small amounts. It doesn't matter if you have a large account or small, always start with very small amounts of money to trade. That way, if things go against you, you aren't as impacted. That is another thing in risk management, which is size of position.

4. Should I use a trailing stop? If you think the moves could be strong, I would use a trailing stop. It gives you the ability to take as much profits as you can, provided you have your trailing stops set correctly. I found the faster things move, the larger your trailing stop needs to be, as usually there are greater swings (greater volatility).

5. Why didn't I see that pattern forming? Look at the big picture by looking at various timeframes. Recognize what the different pattern formations are: wedges, pennants, rectangles, etc, for compression patterns. Then there are various candle patterns and trend patterns (head & shoulders, bear trap, batman, etc). It takes practice. Thinking that perhaps looking at a few charts or a few trades won't suffice. I've looked at tens of thousands. You gotta drill it into your head over and over until you can do it in your sleep.

6. Why did I stay in that trade when it went against me? Hope. Hope rhymes with dope. Instead, tell yourself you're an awesome trader that makes great decisions consistently and do those things that great traders do. They manage their risk, develop their skill, increase their knowledge, learn from every trade.

7. Can someone make money trading? You can make money at whatever you are good at, especially if you are passionate about it, this can fuel you to make great money. I'm working on the latter. Trading is probably one of the most challenging professions that anyone can do outside of parenting. Few survive. It's easy money if you remove all the roadblocks and obstacles.

8. It all looks so easy after the fact, but how do I know what direction it's going to take? The market will give you signs whether it is loading up to the up or downside. You have to be able to see these signals. This takes LOTS of practice.

9. Why do I seem to always be going the wrong direction? You're not paying attention to what the market is telling you either because you're not focused, don't have the big picture as well as small pictures, or you don't have enough skill or knowledge.

10. I do so well in practice, but can't seem to do it in real life. What's the issue? It's psychological and you're going to have to dig here. It may require professional help. It's alright. I see a therapist weekly to get these issues out in the open and deal with them constructively. Keep pressing forward. Gotta trade real money, but also know when you should not be.
2 Responses
  1. Nancy Says:

    I printed this one out. Thanks.


  2. Hope also rhymes with rope, nope, cope, lope, soap, & mope.
    Think of all the words that rhyme with "hope."
    It also rhymes with "taupe", but somebody might think me gay for even entering in such a word as "taupe."
    I remember now you once told me the hope/dope connection. Abandon all hope (dope), ye who enter here!
    Trade with your head, not with your hope/dope.


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