So lessons given to you by the market are expensive. This is a double post as I decided to post this to my trading journal as well as here. The lesson I learned today is one that I should have already learned, but I guess I am hard headed. When trading be aware that sometimes you are wrong. If you open a position and the market does not do what you expect that it should do close the trade. As soon as you suspect a problem with the trade or the trading plan itself close the trade. It is better to Sit on the sidelines and watch rather than to attempt to fix the mistake by taking another trade, or doubling your position, or averaging down. You will find that the chances are pretty good that your first mistake will be compounded by the second mistake of trying to fix the first. By sitting on the sidelines you may find that yes you were right and would have made money or you may find you were wrong and the end result would have been a knock against your account. Weighing the risk vs reward is difficult in the moment and in hind sight one can easily see what the right decision was. Takeaways from this lesson: 1) stop loss is your friend. Always set a stop loss at your acceptable loss for the trade. 2) when writing a trade plan only plan one trade at a time.(this may not be effective for moderate traders. This rule should be considered for begginer or novice traders.) 3) plan your trades in detail so there is no room for misinterpretation of what you expect will happen.
