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GOLD: Possible cup and handleThe situation with Gold is complicated. It looks like a cup and handle, which does not mean that you throw you money at it going long. This is a very wild market. Check it out. Disclaimer: This is not advice or encouragement to trade securities or any asset class. This is not investment advice. Chart positions shown are not suggestions intended to assure you of an advantage. No predictions and no guarantees are supplied or implied. The author trades mostly trend following set ups which have a low win rate of approximately 40%. Heavy losses can be expected if trading live accounts or investing in any asset class. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
OANDA:XAUUSD
by Captain_Walker
Getting Over the Agony of LossesHey Guys! When a trader takes a loss, it can be quite hard. It can strip you of your motivation to trade. Or perhaps even sway your quality of life. But that doesn't have to be the case. Do you ever wonder why experienced traders don't have a fit after a loss, whilst beginner traders can go into a chatic godzilla-like tantrum? No, it's not because they're enlightened in some way or simply not prone to anger. It's because they understand what trading is "truly" about. Trading is simply about refining your strategy and honing it until it is capable of extracting consistent profits from the markets. Moreover they understand that in order to refine a strategy they will have to take losses from time to time. How else will they know if their strategy needs refining or not? Thus the experienced trader views a loss as an opportunity to further refine their strategy and more importantly views these losses as a necessary component to propel their trading to the next level. Now, viewing losses from this perspective, who in their right minds will throw a fit every time they take a loss? So just some advice to the beginner trader. If you don't have a specific strategy that you're working on and are hopping from strategy to strategy; consider making your own strategy. Of course this can be a mixture of strategies you came across in your trading education, but ultimately the strategy must be constructed with your original signature. This means that you understand the nuts and bolts of the strategy and thus have the ability to refine it when necessary. Once you begin this refinement process, upon a loss and the anger starts to kick in, you'll find that refining your strategy with the lessons learned from the loss will diffuse that anger that erupts inside of you. It will become an antidote that if persisted, will get you on the peaceful road to trading success. I hope this helps! Have a great day guys! Ken
Education
by TradingForexPriceAction
5
The importance of confirmationsHey Traders, How many times in your trading career have you had a set up that you are so confident in and is so clean that you just enter it without checking for confirmations? How many times have you seen price retract into a demand or supply area with so much force that you simply think it cannot go wrong? This trade setup right here is a prime example of why it is so important to check for confirmations and ensure that the lower time frames are indicating exactly what you want to see prior to entering a trade and not entering a trade out of fear of missing out and buying as soon as the price dips into a demand zone. Let me know in the comments if this relates to you or you've ever had an issue like this. The analysis on the four hour had me very confident once we had broken over the recent highs. We indicated after a very long and steady downtrend that we could potentially start seeing a movement to the upside. Once we did get a clear structure break, it was followed by a strong push to the downside in which I like to call The Archers pullback. Price retraced straight back down into our demand area, which means we ticked step one and now we were looking for step 2 and Step 3. As you can see, looking at the one hour chart, we had a steady downtrend formed prior to having a strong news release which pushed price down into the demand zone. Once we had this trendline formed, what I simply wanted to see was an area of consolidation, potentially a descending channel. Then a break of this trend line followed by a pull back followed by a break of structure down on the 15 minute. But what you can notice is as we have this trendline drawn an we dip into the demand zone, that price didn't break the trend line. It simply went sideways and did form a descending channel, but to the point where we broke the recent demand and set a lower low. In turn, it made this analysis invalid. It is highly important that with all trade setups like this, especially trading the higher time frames, that we dive into the lower timeframes to ensure that the demand or the supply is entering the market the way we're anticipating so we can trade the distance with confidence. If we do not wait for confirmations then we are sitting blind and entering what you would call FOMO trades. Entering with much higher risk. As we can see here, price can just rip straight through these areas and we must be prepared to not take trades. If we were to enter blindly into these areas, this trade would of resulted in a loss on the account. Do you find this analysis helpful? Should we chat more about this in the future?
Education
by the5erstrading
6
Clear indication of large gains followed by even more lossesThis chart, (programed in the GIBBERISH language) clearly indicates large gains by those holding the TORN asset, the native asset of the Tornado Washing Machine Corporation of Topeka, Kanas which are then followed by inverse parabolic losses on a Biblical scale and a unforeseen spike in the Spousal Abuse Index. Owners of TORN should pay special attention to the concentrated ownership of this coin and would do well in acquiring the home address and telephone number of the owners of this address. Owners are also advised to re-watch the classic film The Wizard of OZ to fully comprehend the significance of the name tornado and the risk involved in standing directly in the path of high turbulence winds, but this is not advice. Should you see the formation of the Flying Witch in the sky pattern, this will indicate that your trip is to begin shortly and seat belts will be of no use and you are to simply place your head between your legs and kiss your ass sweet qood-bye. Further updates to be provided prior to adverse activity. The Sublime Prince of Enlightenment Toronto, Canada * Full Disclosure: The author of this financial analysis holds a large bag of this asset and hopes to dispose of it at the point where he will realize maximum financial gain at the expense of anyone, anyone at all, who understands the full value of this coin. The author also asserts that all such coin has been fully washed and cleaned and then dry cleaned at Jombo Cleaners down the street , with no trace what so ever remaining of its source or the dirty filthy hands that have touched it after it was removed from an unnamed DEX which shall remain unnamed for the reason of personal privacy and/or any interest by the FBI, CIA or SEC et al in such ill founded rumors.
TLong
by WMWToronto
Commodities In 2021 and a View for 2022It is official- Inflation is no longer “transitory,” according to the US central bank. After blaming rising prices on pandemic-inspired supply chain bottlenecks throughout 2021, the Federal Reserve swallowed its pride, admitting inflationary pressures are far more structural than “transitory.” Economist Mohamed El Erian called “transitory” the worst call in the Fed’s history. What the Fed, US Treasury, and most mainstream economists have not said is that the blame lies at their feet. The liquidity tidal wave and stimulus tsunami lit the inflationary fuse in 2020 that continues to burn in early 2022. The dollar index may have rallied by 6.34% in 2021, but its appreciation is little more than a mirage. The foreign exchange market conveniently measures one currency’s value against another. The dollar’s ascent may make the greenback the strongest fiat currency, but it is the best horse in the glue factor when it comes to value. All fiats have lost purchasing power since 2020, and the dollar is no exception. The stock market, real estate prices, cryptocurrencies, and commodities have all experienced substantial price appreciation, which is also a mirage. Fiat currency’s purchasing power continues to decline, and that trend remains firmly intact as we head into 2022. Commodity prices began rallying after reaching bottoms in early 2020 as the pandemic swept across the world. The rally continued in 2021 and looks set to take prices to higher lows and higher highs in 2022. 2021 was a very bullish year in the commodities asset class A composite of 29 of the leading and most liquid commodities futures and forwards that trade on the US and UK futures and forwards exchange moved 4.73% higher in Q4 2021 and 26.79% higher in 2021. In Q4, the leading sectors posted the following results: Base metals moved 9.65% higher Grains gained 9.31% Animal proteins moved 4.73% higher Soft commodities appreciated by 4.25% Precious metals posted a 2.80% gain Energy commodities fell 3.02% In 2021, four of the five sectors posted double-digit percentage gains while only precious metals moved lower: Energy was 54.13% higher Base metals gained 38.09% Soft commodities rallied 31.57% Grains moved 29.71% to the upside Animal proteins appreciated by 19.16% Precious metals fell 11.91% The overall performance was highly bullish as inflationary pressure, pandemic-inspired supply chain bottlenecks, and other factors pushed prices to multi-year, or in some cases, new all-time highs. An interesting observation between a commodity composite and the S&P 500 In a sign that inflation pushed all asset prices higher, the performance of the leading stock market index and commodities asset class was virtually the same. The long-term chart of the S&P 500, the most representative stock market index, reflects a 26.89% rise in 2021. The commodity composite that includes the leading precious and base metals, energy, soft, gains, and animal protein markets was 26.79% higher. The results are uncanny but reflect inflation’s impact on prices. Thirty-three winners and eight losers for the year Winners outnumbered losers by better than four-to-one in the commodities asset class that includes 41 different markets. Metals, foods, and energy commodities posted the most significant gains. Thirty-two of thirty-three markets that moved higher posted double-digit percentage gains, and thirteen markets were up over 50%. Of the eight markets that moved lower in 2021, five were precious metals. The sector may have lost 11.91% in 2021, but it moved 27.85% higher in 2020. Gold reached a new all-time high in 2020 and palladium in 2021, before the shiny metals corrected. Iron ore, the worst-performing commodity in 2021, was nearly 73% higher in 2020. Soybean meal rose by over 43% in 2020. Cocoa posted a marginal gain in 2020 and a market loss in 2021. Three reasons the bullish relay race will continue The ascent of commodity prices since the 2020 lows has been nothing short of a bullish relay race, with one market handing the bullish baton to the next. Three factors favor a continuation of bullish price action in 2022: Inflation : The Fed may be talking a hawkish game in early 2022, but action speaks a lot louder than words. At the December FOMC meeting, the committee forecast a 0.60% Fed Funds rate in 2022 and a 1.90% short-term rate in 2023. Even if inflationary pressures recede, real interest rates will remain in negative territory, which is fuel for higher inflation. As fiat currencies’ purchasing power declines, commodity prices are likely to continue to make higher lows and higher highs. The supply chain : Geopolitical issues and the pandemic’s legacy continue to create bottlenecks preventing commodities from moving from producers to consumers. Moreover, tensions between the US and Russia and the US and China develop roadblocks for commodities and distort prices, creating gluts in some regions and shortages in other areas. Policy : The shift in US energy policy to address climate change changed the fundamental equation for fossil fuels. OPEC and Russia now control world petroleum pricing. Increased regulations on US drilling and fracking will weigh on supplies. Moreover, addressing climate change dramatically increases the demand for battery metals and other commodities that are critical inputs for greener energy via alternative and renewable sources. Energy is an essential input for all commodity production. As energy prices rise, it puts upside pressure on all commodities, including grains, animal proteins, and metals. Inflation is a vicious cycle that is challenging to address once it gains speed. The US Fed and other world central banks are far behind the inflationary curve in early 2022. Bull markets rarely move in straight lines Bull markets can experience brutal corrections. In 2021, we saw copper drop from a new record high at nearly $4.90 per pound in May to below $4 in August. Lumber dropped from over $1700 per 1,000 board feet in May, a record high, to under $500 in August. Crude oil fell from its highest price since 2014 at $85.41 in October to below $63 in early December. Natural gas tanked from $6.466 per MMBtu in early October to below $4 in December and January. Many other commodities suffered equally ugly corrections. However, most found bottoms and have rallied from the higher lows than in 2020. I expect a continuation of higher lows and higher highs in the commodities asset class in 2022. The trend is always your best friend, and it remains higher in the raw materials asset class since 2020. 2021 was a bullish year in commodities, and I expect that trend to continue in 2022, but the road to higher prices is likely to be very bumpy. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
SP:SPXEducation
by Andy_Hecht
1
LONDON SESSION:11-23 REVIEW +45RR POTENTIAL BUT POOR EXECUTIONToday's London session was a bit of a fumble. I am still working on psychology and being confident in my analysis. My overall analysis was correct but executing my trades and accepting losses has been a struggle. If I placed limit orders on all my ideas today the optimum outcome would have been +45RR-including the exception of the EU 1:13RR trade loss due to spread. If we do not count that trade today's recap would still be a +32RR day. For me that is 8k and 16% gain. More stats: 44% strike rate,4 wins and 5 losses, average RR =12.5RR per winning trade. All in all I am working on execution because the potential P/L looks great to me.
Short
by CydneyFleet
LONDON SESSION RECAP - LOSSES Took three losses on AU today, the bullish rally to the 4H was a strong yet stubborn one. Price kept showing sign that it wanted to fall but it was just the composite man sweeping all of us in their orders. I was swept twice and the third time I was just asleep. In hindsight it makes sense why these trades did not play out. My takeaways for today were simple, get some rest when needed preferably not while actively trading and always place a SL and TP. See y'all tomorrow.
Short
by CydneyFleet
MONEY: IN SMALL TRENDSIn my own methodology I've shown in other charts that, it doesn't matter which time frame you make your money. I even showed a 3 min trend on one occasion. All this true is trend-following - which is different to following a moving average of some sort. The ATR line reacts differently to price fluctuations. The important thing is to minimise losses. This chart is a 15 min time frame. It's of little value now because the start of the trend is where you want to be. But for the future I'm showing where the entry point is. Similar strategies can be used on other time frames. 1. See the trend breaking down and fighting to stay afloat. 2. See the double top on the 15 min time frame. 3. See price collapse. 4. See the rebound to 0.5% fib. Experience is required with all this. In this scenario the stop-loss could have been just above 0.618. That was an unlikely rebound in this particular scenario because price was struggling already. (In other scenarios where price isn't struggling as much I've seen retracements to 0.76 and above). Please note carefully: true trend following is a higher risk strategy but also an exceptionally higher reward strategy. It loses far more often than other strategies. But numbers of losses mean little. Why? It's the aggregate of the minority of big gains well outweighing minimised greater numbers of small losses. It certainly isn't for 'everybody'. In he captioned scenario, nobody knows how far that 15 min trend will go. NOBODY! For trend-followers in this scenario, the exit would be the amber line. In other words, the market shows the entry point and the exit point. That's very scary. See same strategy on the lowly 3 min time frame below Disclaimers : This is not advice or encouragement to trade securities on live accounts. Chart positions shown are not suggestions intended to assure you of an advantage. No predictions and no guarantees are supplied or implied. The author trades mostly trend following set ups which have a low win rate of approximately 40%. Heavy losses can be expected if trading live accounts. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
A
by Captain_Walker
DON'T get wedgied! Peak excitement on Friday - as retail traders pumped various markets with billions in cash. This was alongside institutional traders who had been bailing out. Well, retail won a significant limb of this, from the bottom edge of what now looks like an ascending broadening wedge following a major bullish drive. Biden echoed the FED's mantra on transitory inflation in the last few days. That seemed to be a signal for retail traders on the apps to dive in. Ascending broadening wedges after long bull drives north, are usually a signal of weakness. Just to be clear (and read my disclaimer below), this does not mean that the market will crash now. Price could move significantly up and whipsaw the top of the wedge before heading for the moon! 🌛 This wedge formation creates probabilities. Probabilities exist in minds. The probability estimate based on this snapshot (right now), is for a significant correction. This is not advice! This is opinion - a very different thing to advice. How probabilities work : If 'you' estimate there is a 51% chance of a correction, that leaves a 49% chance there will be no correction. A lot of novice traders forget about the lesser probability, which does not favour their mindset. There are other silent probabilities adding up in the background (DYOR): 90 year economic cycle, coinciding with 20 and 10 year cycles - and we're not out of the woods with a major pandemic. We are at year 11+. Some say 'cycles mean nothing'. Everybody is entitled to their own belief. I think these are dangerous times to be throwing money into the market going long. If you are about to short this position, you have to have money that you can afford to lose. Read that again. If you can't lose money, stop trading - instantly! Alternative reasoned perspectives are most welcome. Disclaimer: This is not advice or encouragement to trade securities or any asset class. This is not investment advice. Chart positions shown are not suggestions intended to assure you of an advantage. No predictions and no guarantees are supplied or implied. The author trades mostly trend following set ups which has a low win rate of approximately 40%. Heavy losses can be expected if trading live accounts or investing in any asset class. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
U
by Captain_Walker
How to manage & deal with consecutive losses in trading ? Trading Psychology: How to manage & deal with losses/consecutive losses in trading ? Hi everyone: Today I want to go over a very key trading psychology lesson on how to deal with losses, especially consecutive losses. This is bound to happen to any traders, whether you are new or experienced. ITs something all professional traders will have to deal with on a regular basis. Understand that, dealing with losses psychologically is the key factor in the success of a trader. This is because losses are inevitable, and trading is a probability, which trades that you take will end up both in wins and losses. However, traders usually can not accept losses, due to their ego, greed and other emotional factors. Aside from having a good risk management, trading plan, and trading strategies, traders can still experience the psychological emotions of losing. This is due to the fact that we are humans and we are an “emotional” animal. We don't want to be wrong, at all. Taking a loss is like getting slapped in the face by the market, which we have egos to fight against. What ends up after taking losses or consecutive losses, it puts traders at a disadvantage where their emotion is high, and likely to “revenage” trade to chase back losses, which end up in a deeper hole. To deal with such psychological phenomena, take a step back and observe your situation: First, did you follow your trading plan/strategy on how to enter, set SL/TP, and management ? Second, did you take an emotional trade due to greed or fear of missing out ? Third, have you journal down your losses and review them to make sure they are trades you really want to risk your capitals on ? By now you will see why we need to review these. Trading is a probability, not right or wrong. It's a random variable that you are putting your $ at risk. So if you understand the rules and plans that you follow and execute a trade accordingly, then there should NOT be any negative emotions towards the outcome of the trades, whether they are winners or losers. When I discuss the trades I entered every week in my trade recaps videos, I am always happy to enter a position, even if it goes to a loss. This is because I have done enough backtesting, chart work, and plan to enter a position. I understand strictly from a probability point of view, I could have a higher strike rate, and more often the trades will end up as a winner rather than a loser. However, I also understand and acknowledge that some trades will end up in a loss, disregard mine technical analysis or other’s fundamental analysis. It is what trading is all about. When I have consecutive losses, I will always review the 3 points I mentioned above and make sure they are all valid for me. Then I simply will take 1 day off from the market, chart, phone, and just get your mind clear. Come back strong after 1-2 days of rest, and have a positive mindset. What traders often do when they have consecutive losses is to right away re-enter back into the market and try to chase back their losses. This has always been the downfall of losing and it creates anxiety in traders’ minds. Such a negative experience is going to stay in the traders’ mind longer and deeper, compared to consecutive winners. So wise we understand that is the case how our brain is "programmed” into thinking, then it's up to us to do the opposite, and fight the urge to “revenge” our losses. At the end of the day, no one is trading your trading account, except yourself. Taking ownership of your account, learning to control our emotions, understanding the probability side of trading, and learning to let go, drop our ego will help us in the long run in this industry. I hope these pointers can help some traders who are still struggling with this concept. It's impossible not to take losses, but professional traders deal with it on a regular basis and still remain consistent in the long run. Thank you I will forward some Trading Psychology educational videos below on some of the topics explained today. Trading Psychology: Revenge Trading Trading Psychology: Fear Of Missing Out Trading Psychology: Over Leveraged Trading Trading Psychology: Is there Stop Loss Hunting in Trading ? How to deal with it ?
Editors' picks
BITSTAMP:BTCUSDEducation
by jojofang0901
58
AMC Decision Time!Hello Community! AMC has had a very strong run all last week. It is currently trading in a bull flag pattern and is at a crucial point at the bottom of the triangle. If it fails this support we can expect the price to drop down to the yellow S/R line shown or the 55EMA. Covid-19 is slowly becoming less of a major topic and movie theaters are beginning to pick up in sales, so I wouldn't be surprised if this continues to grow. I'm not 100% sure though but if it bounces successfully we can expect a battle at the top of the triangle before breaking through to retest the previous high. Let's see. If entering a trade don't forget to use a stop loss. Don't trade with what you're not willing to lose. Love it or hate it, hit that thumbs up and comment. It'll be greatly appreciated! This is not financial advice. Safe Trading Calculate Your Risk/Reward & Collect! Simplicity Wins
NYSE:AMC
by rnaofs
15
BTCUSD: Diamond hands? Make more or lose more. Some will learn, some won't learn and some need to feel the pain but still won't learn. Few may recall that recently (linked post below), I said that the sharp switch on the Daily ATR was indicative (not predictive) of a trend switch for the south. That was transformed into a other lower time frame trend switches. On this chart you see a flattening of the 4H ATR then price collapses. The reasons are not important because this is technical analysis (TA). TA tracks the collective direction of sentiment and has built in many of the underlying fundamental issues. The 4H time frame is important in about 75% of all trading instruments - which doesn't mean that you just jump in on first sign of a 4H switch (long or short). In the 4H scenario shown here, I fully expect (not predict) price to return to a 'psychologically magical' $50,000. If it does short-sellers will be looking for a short with a reasonably tight stop loss probably at $56,500-ish. Oh yes, that means a loss, if shorting - for a trend following scenario moving south. And of course, anybody doing proper trend following knows that losses are heavier than any other trading methodology - but that the gains are tremendously more. (Read that brutal disclaimer below) For those wishing to gamble going long, also expect a rough ride north to around $50,000 if it gets there- with heavy potential losses. I do not promote gambling. Taking calculated, measured and affordable risk is not gambling. Whatever you do, watch out for tweets like 'diamond hands', from you know who (and to be clear, it's not from me)! If you don't know about this, what are you doing trading Bitcoin? Disclaimers : This is not advice or encouragement to trade securities on live accounts. Chart positions shown are not suggestions intended to assure you of an advantage. No predictions and no guarantees are supplied or implied. The author trades mostly trend following set ups which have a low win rate of approximately 40%. Heavy losses can be expected if trading live accounts. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
BITSTAMP:BTCUSD
by Captain_Walker
2
Is the trend really your friend?This is a short take. I'm showing a 30 min ATR trend line. Loads of traders know that ' the trend is their friend ', but do they truly exploit it? I don't think so. There were three main opportunities to exploit this trend. The problem is - now you see it but when it's developing you can't. But at each of two points where price hit the 30 min ATR line, it was worth a short, with a very tight stop loss. Trend following is a very difficult strategy, but rewards can well exceed other methods of trading. It makes sense to explore it, and develop the skill (safely on paper trading accounts). Disclaimer: This is not advice or encouragement to trade securities or any asset class. This is not investment advice. Chart positions shown are not suggestions and not intended to assure you of an advantage. No predictions and no guarantees are supplied or implied. The author trades mostly trend following set ups which has a low win rate of approximately 40%. Heavy losses can be expected if trading live accounts or investing in any asset class. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
BITSTAMP:BTCUSD
by Captain_Walker
CHALLENGE: AUDJPY - PLACE YOUR BETSAhoy! There is money to be made and lost here! 🤦‍♂️😂 I'm short with with an affordable loss. Others may wish to go long with an affordable loss. It's not about how right you are but how much you limit your loss if you're wrong. This is a nice one for new traders to experiment with on a paper trading account. 👊 Trading is a strange activity i.e. you can't make money unless you're prepared to lose. 😟 Disclaimers : This is not advice or encouragement to trade securities on live accounts. Chart positions shown are not suggestions. No predictions and no guarantees supplied or implied. Heavy losses can be expected if trading live accounts. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
by Captain_Walker
Dealing with losses... before they occurLosses are part of this business. People do not react well to losses. Badly handled losses in trading can trigger bigger losses. Furthermore, these have the dangerous potential of wiping out entire accounts. If you want to make it as a trader you need to have a solid psychological approach to accept and handle losses. Lots of internet articles are suggesting that the way to prevent debilitating losses in trading is to follow risk management rules. What are those rules about? Basically, they are simple thresholds indicating the maximum $ /percentage you should risk per trade, day, month, etc. Having such rules is a must but it’s not enough. You can still lose much if your mind is not actually prepared to implement them. That’s why many traders set rules only to break them in the most inappropriate moments. People do not follow their own risk management rules because they are not psychologically prepared to accept losses. They are not prepared for the pain caused by a loss or a series of losses. The single most efficient way to handle losses is to accept them consciously and unconsciously. One of the most dangerous ways to react to losses is “revenge” or “on tilt” trading. This happens when the pain caused by a loss is so high that the trader loses his / her rationality and only wants his / her money back, disregarding most of the things he/she actually knows about the market. The brain cannot accept the emotional discomfort and the fastest solution is to quickly find a trade to make the money back. Most of the time, the quickest trade is in the same instrument (FX pair, stock, etc) that generated the initial loss, by averaging down/up or flipping. Some of the most experienced traders can work their way out but the vast majority will only make things worse. In order to prevent this kind of psychological slippage, you need to prepare your mind to consciously and unconsciously accept losses BEFORE they occur. With the help of a psychotherapist or by yourself you can perform visual exercises where you will imagine yourself being in a losing position and reacting the right way. This would desensitize you if done right. The technique I always use each time I open a position is to do that desensitization process “on the fly”. I watch the market and I see an opportunity. BEFORE opening the position, I imagine myself in the posture of facing that trade ending in a loss. After that, I imagine that trade going the way I want. I might even go back and forth (in my mind) a few times between losing and winning. This way, I prepare my unconscious mind. If I cannot imagine myself easily handling the loss (or the win) I will simply reduce size. Pay attention though, I am not recommending here to imagine yourself constantly losing because this would do more harm than good. This would be a separate topic about the power of visualization exercises.
OANDA:XAUUSDEducation
by Mihai_Iacob
14