Never Look Back
Contrary to what popular songs of today might say, where they encourage you to look back at it, NEVER look back at trades you sold out of. Well, at least until a little later where emotions simmer down, and it will not mentally mess you up.
As traders, especially with a bias towards technical analysis, we are taught to use prior price action to help us determine the probability of future action. So, we look back at what the stock has done, in order to form a thesis and our entry. But after we make our entry, and then take our exit, please allow time for yourself to mentally gain composure, especially if you know the stock ran after you sold out.
In our private server, I had a conversation with one of our traders.
They had a great plan. They nailed the entry. Then, the stock pulled back on them. They stuck to their plan, and stopped out.
FANTASTIC!
In my eyes, I could not ask for anything more.
They planned the trade and traded their plan.
And even after that exit, it looked good until after hours when the stock price took off and continued into the next day. You see, this was this trader’s first play they made “on their own,” and seeing the price take-off, just like their thesis said it would, but after they hit their stop loss, was distressing. As it is to all of us, newbie or veteran.
This started causing them to question their plan and doubt their abilities right off the bat.
This is my problem at looking back at the play too soon after selling. You immediately feel like you missed the trade, and you want to tweak your style or rules, but this is not the answer.
If you stick to your plan, even if it’s at a loss of capital, it is still a major win, because you did not LOSE all of your capital.
You can not play the game if you do not have the capital to stay in the game. Therefore, we have stop losses and we set strict rules. Your job as a trader is to preserve your capital and live to fight another day.
With that being said, when the trade is over and we harbor no more emotions with said trade, we SHOULD go back and reevaluate our trades. At Gold Rush, we are huge proponents of journaling EVERY single trade.
A part of that is going back and recapping the trade overall, where did it go right? Where did it go wrong? What is the one signal you missed, and what something you nailed completely? This way we can continue to get better and refine our strategy.
This whole experience is fluid, and a lot of times the trading part is the easiest part of all, it is the emotional and mental part that will eat us alive.
We have rules to stick by for a reason, and its longevity over glory, stick to the plan, and this will be a skill you can use to make money for a lifetime.
Brick by Brick
--- S.