Going Off Track (and Making Bad Trading Decisions)

Filed under: Learn Forex Trading |

 

Screen shot 2013-01-30 at 10.13.13Sometimes as traders, just like in life, we go off track and make bad decisions. I outlined one of these examples in a forex trade example today. It was a set up that I should have taken, a set up that I normally would have taken, but for some reason, today, I did not take it. So the question is, why do we sometimes go off track and make bad trading decisions?

 

In my case, it was the circumstances surrounding the set up. I had just had two losing trades, and the last thing I wanted was to have a third right at the end of the month. The previous two set ups had been weak ones on the intraday charts, and I felt that I may have been overtrading and wanting to be in the market too much. Therefore, when I saw a set up on the daily chart, although it jumped out at me (as all good trade set ups should), I over analysed it and in the end, talked myself out of it. However, there was not even a good reason to talk myself out of it, and in the end it was a case of a gut feeling that was a false one at that.

 

Prior to the two losing trades, I was up by 9% for the month. The two losing trades put me back to +7% for the month, and one more would have left me at 6%. Going from 9% to 6% would have been a disappointment, and I think that this, right at the end of the trading month, was also a factor in abstaining from the set up. Had the set up come after two weeks of not finding any trade setups in the middle of a month, then I would have certainly have taken it. Therefore, we need to try and be consistent with the trades that we take (and don’t take), regardless of the circumstances surrounding them.

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