Good day to all colleagues in the trading workshop and those who are reading my blog now. Today we’ll talk about what if everything went wrong? Many traders do not understand why they are losing. They use a proven trading system, open a deal according to the rules. But the end result is a loss. It also happens that one loss is followed by another, then another. Many people stop trading and try to figure out the reasons for the failure. It turns out that everything was done the same way as always. Only the market behaved in a completely different way from how it was before in similar situations. But what should a merchant do if events do not develop the way they did before?
Price Movement Forecast
Seasoned traders say that you shouldn’t try to guess the possible price movement. They are 100% right. Whoever tries to predict the price movement, no one succeeds with sufficient accuracy. Moreover, in addition to forecast accuracy, statistical stability is also needed. And this is simply impossible in an unstable market. So what should the average merchant do? You need to analyze the current market situation well and look for opportunities to make a profit. Everyone uses their own methodology for market analysis and trading. Are there any common points for different techniques? Of course there is – you should always know the algorithm of actions in case of cancellation of the planned scenario.
Trading system rules
Some of the speculators use a ready-made trading system, of which there are many freely available. Others create their own TS using ready-made trading solutions and their own experience. In any case, each trading system must be tested and optimized for parameters. Many traders, when testing a TS, lose sight of the moments when the system gives a single failure. Few people pay attention to single failures. Indeed, on the historical part of the chart, most situations are profitable. But in real trading everything is not the same as in the historical part of the chart. And therefore, you must always know what to do if the script does not develop as planned. There are exceptions to any rule. And the market often behaves against all established rules.
Trading from levels
Most traders trade from levels. This is one of the easiest and most effective ways to trade. Everything is extremely simple – we buy from the support level, we sell from the resistance level. When to open a position, each speculator determines his own methodology. These are either indicator readings or non-indicator methods. But the so-called false breakout of the level is quite common. Many inexperienced traders perceive the price going beyond the level as a development of further movement. The price activates the placed stop orders and pending orders. It may even update the breakout extremes several times and return to its usual range again. In such situations, many people get several losing trades.
What will i do?
Every speculator hopes to make a profit when a TS signal appears. The situation is analyzed, and the trader plans the size of the profit and the level of possible loss. But the main emphasis is always on what the profit will be. Only each time, before opening a deal, you need to answer an important question. What will I do if I cancel a script? The second, no less important question – when is the script canceled? If you always know the answers to these simple questions, you can significantly reduce the risk of a loss.
March 24, 2021