Falling chart.
For most of us if not for all of us that is the worst thing that we can possibly see in a day. That is of course if we go about our day without seeing a scoop of ice cream lying on the ground. But that’s not the point.
Falling chart.
For a lot of us that is not the worst thing we can see. That is our fear. And that always sucks when fears come to life. After all we trade to make our lives easier and more comfortable. Not to make our lives even more miserable. And the more we trade the more likely it is that at some point we are going to see that feared falling chart. And when we see it, there are things that we start doing in panic without even thinking about WHAT IT IS that we are doing. And here is where the real problems can begin for us.
So, what are the worst things that we can do when the chart starts falling down?
1. Panic.
2. Stay in.
3. Not use a trading signal for the next trade.
1. Panic.
Our first enemy in case of a falling chart – panic. We stop feeling rationally. We start doing things that we are not really responsible for. We are feeling helpless and try to do the right things. But in the end we are ruled by panic.
It is especially true for those who haven’t been in trading for a long time and who are experiencing their first big fall.
In this state it is better to just go out of the trade, and take the rest of the day off. Do not try and look for patterns are recovery signs. Even if you are going to find them, you are not going to be able to implement them right. And that is a real threat and real problem here. You might be too late for the recovery or not see it at all.
Panic is going to drive your mind.
NEVER TRADE WHEN YOU ARE PANICKING.
2. Stay in.
Another bad thing is to stay in a trade when you see the declines.
If you are not doing this and if you think that this is a silly point in the first place – bear with me.
Don’t you think that there are traders out there who prefer to stay in the trade when the chart starts falling down? Just to see what’s going to happen next? Just to wait for a real recovery that is not only going to bring back the lost money but also to help them earn more and more? Of course there are people who think that! More than you can ever imagine.
And they are making a serious mistake.
We have already talked about this possibility – there is no guarantee that the chart is going to recover when it falls down. There is no guarantee that the chart is going to recover to the high points reached by it when the times were good so never hope for that to happen. When the chart falls – leave. Just leave and start over later.
3. Not use a trading signal for the next trade.
When the storm seemingly passed we think that we are out of the woods and go about trading with no thoughts of the risks. But this is a mistake. We need to think twice as the risks are always there. And we need to use trading signals to their full capacity – after all they give us the entire spectrum of the information we need about the trade.
Not using a trading signals when the situation is volatile is a huge mistake. Especially when they are free and go perfectly with any broker and any asset that you might be trading at the moment.
