When trading, there are a few obvious things we need to set straight if we want consistent, good results:
Your Edge!
You have to have your own sweet way. Just like our faces are different, the way we see things, perceive things, and feel things are different. This is why, when we all look at the same chart, we will see things differently. This is not a problem if you have a standard way of evaluating the market.
When trading, your edge needs to give you entry, stop, and target, and you should ensure the trade is worth the risk.
If you have your approach standardized, like the five steps we go through in the coaching program, then any approach you build for yourself is good, as long as it has a good hit rate.
You have to own your edge, and it has to be your way of trading. You tested it, you are comfortable with it, and you are consistent with it.
Your edge, therefore, includes not just technical analysis but your complete steps to take from beginning to end.
Your Nerves!
If you have a proven method that is overall bringing you more than the losses it causes, then keeping yourself together is the next important thing. If you are losing five times in a row, what is your reaction going to be?
Will you now ditch your approach? Do the opposite of what you are doing? Take a step back and evaluate if, in the past, you had bad runs? Re-evaluate the bigger time frame to see if you missed something? Jump off the cliff?
Many traders have a problem with losing. We need to understand and believe that we will have losers. Once you are in a trade, the bullet is out of the barrel, and it is not going to come back.
When you are in a losing streak, first of all, it should lead you to take a step back according to the percentage limit for the maximum string of losses you ascertained initially (remember money management rules in coaching).
Having a losing string of trades does not mean you are applying your strategy wrong, because there are times like that! BUT, if you are trading with time and price together, there should not be! Simply, because you are matching time and price, and you have a tight entry, designated target with time and price, plus you have swing days. I have had a string of five to six losses, but not many and never enough to burden the account with a dent.
Let’s say you are only using technical analysis. You must take a step back if your account has come to a 15% loss in a period (week, month). There is obviously something you are missing. It can be the below:
- Market conditions changed, and you are not aware of it.
- Not checking your news hours. (If you are using timing, obviously, for us, this won’t be a problem).
- Not following your rules.
- Lack of focus.
- Getting greedy.
- Getting angry and revenge trading.
- Scared about the next trade.
Solution:
Take a step back when you are getting too many thoughts.
Start with a clean page:
Get back to your step-by-step technical analysis evaluation routine.
Try to spot the reason for the string of failures.
Then, the next time you enter a trade, it must be at a daily/weekly swing level where you make a good start and follow it to its end. This will give you some good returns to cover that loss and get back into the rhythm. Do not just enter a trade anywhere once you’ve solved the mystery. Wait for the heavy buy/sell levels and get back into the routine there.
At the big levels (if you are using timing), use the swing days and the hours to price and enter the trade. This will cover your trade for sure, and if correct, will give you a good run!
The major principle you should always stick to is: when in doubt, stay out! Many traders have a staying-out problem. We never know if a trade is going to be a winner or not, but if your setup and timing were according to your trade rules, then you take that trade! If there is something off, and you have a question mark in your mind, that is doubt, so stay out. Even if that trade goes according to your anticipation, do not bang your head on the wall saying, “I should have taken it.” Wait for the next setup as per your rules! If your strategy is working fine, stick to your guns.
With timing and price together, you have a much better chance of getting things right. But if you are working just with technical analysis, then give tweaking your strategy a thought too if a certain rule is constantly causing a loss. This may be asset-unique too. For example, a U-turn strategy may work for assets that are not very volatile, but may not work for crypto, as some of them go up and down with big moves. The same can be true for Nasdaq, as it can be more volatile compared to other indices. Not all assets are the same, so comparing what works and doesn’t for them is worthwhile.
