Chicken Says Good Entry+Bad Exit = Bad Trade!
It is good to respect risk in trading. However, if you are overly cautious, it is equally detrimental to your trading as you will see from my today’s FAZ trading.
My paper trade: I usually paper trade in USA markets. The reason is there to do that. I may tell the reason some other day in the separate post.
Today, I went long on FAZ the first time. The entry was almost perfect. But I left so much money on the table. Why? I chickened out. Here is the chart. What makes trading hard is that we will have to make almost everything aligned for a successful trade.
1: a good entry.
2: a good exit
4: willpower to stick to your plan (emotion control)
It was a textbook set-up (a wedge) again. There are just so many patterns to trade.
Here is the 5 min chart off Good entry+bad exit 🙂 (open in new window to see larger image)
My entry was good, but not perfect. If I had waited a bit more, I would not have bought it on the head of that candle (upper shadow). Since this guy moves big and fast, we really do not have to fuss over a small spread like that. So the entry was very solid.
My exit was horrible. It was beyond the words. After it spiked by 2 percent, I started my trailing stop which took out of my stop. It was a thief who stole my money and ran faster than anyone. See how big and fast it moved after shaking me out. The reason I started my trailing stop was that I chickened out. It was simple as that.
So, what is the learning? Trade will full conviction and do not chicken out. Once a trade is on, Exit should be based on pre-defined set of trading rules. Even the pro-trader like me can make such mistakes. Welcome to the trading world. You miss – Market hits.