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Have you had a trading day that went like this?
1. No tier 1 trades or your bread and butter trade set ups were available or maybe they were but you missed them
2. Your next step is to vehemently search for a new trades because you are upset that you missed a lay up trade or you “need” to trade because you want to make bank.
3. You get a case of “trader goggles” and you begin to mistake Tier 2 and 3 trades for Tier 1 trades
4 You need to make money so you double up on a Tier 2 play with lower odds than normal
5 You account takes a big hit and so does your ego. Strange thing is when you took the trade you knew that it was going to go down like that but you did it anyway.
No mater who you are you have pulled a stunt like this a time or two. Sometimes its hard not to , especially in the early development of a trader to fight the impulse to trade. Its natural to feel that if the market is open you have to trade or “there must be opportunity somewhere” but its times like these that not only can cost you significant amounts of money they also can do psychological damage that can last for a long time . In my opinion these are the worst losses to take because you knew better and you know you have no one to blame but yourself. This is right along the lines of revenge trading and ultimately what you are doing is going in with to much size on low probability trades as opposed to waiting for the right set ups.
In trading it can be hard enough to make money when you do everything right let alone when you sabotage yourself by taking trades that you know you should not be taking.From my experience the best trades have came when I was the most patient or allowing the trade to come to me rather than over scan for stocks and try force an opportunity.On the flip side my largest losses came from trying to make my money back immediately after a loss or force opportunity’s. Keep in mind by doing your homework at night, focusing on only a few opportunities as apposed to a watchlist of 50+ stocks, will eliminate a big chunk of trader anxiety and cut down dramatically on your missed trades. Regardless you must do everything in your power to fight the impulse to trade stocks that do not fit into you trading plan even if it means you trade nothing at all for that day. At first changing behaviors like this can be challenging but in no time you will see an improvement in your results.
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