More often than not, you may find yourself in a situation where you don't know whether you should hold on to your trade(s) or close them. More particularly losing positions!
I always remind my young trader friends some of the important rules before entering a trade. One of them is to list down at least 5 solid technical reasons for entering a trade. If they are unable to come up with enough reasons based on technical analysis, the entry is void. You will be surprised when most of the time, traders enter their trades solely based on gut feel or emotion.
I will list here the top 10 signs (in my experience) that you are on the wrong side of the trade:
1. You have sleepless nights
2. You start reading forums to see if there are anyone else with the same trades as you do
3. You start checking on economic calendars to see if there are upcoming news that might save your losing trades
4. You can't seem to focus in doing other things. Or communicate with other people effectively
5. You start looking around for a "better" system or EA
6. You keep telling yourself that if you survived this ordeal, you will never repeat the same mistakes again
7. Thoughts of quitting trading comes across few times
8. You are wondering whether you should deposit more funds to allow more room for drawdown
9. You start looking aimlessly at the chart wondering whether you should hedge the losing positions but not sure how to get out of it afterwards
10. You start hoping and sometimes pray for miracles
I find myself having a rather nostalgic feeling writing these as each of them bring back bitter memories. The worst part is, these are trades that are potentially account killers. I would never want anyone to experience these as the continued stress will lead to decline in spiritual, mental and physical well being. However, the sad part of reality is that every serious trader must go through these in their trading career. When we make mistakes, learn from it and move on. Without first experiencing failure, one can never taste success. And one can only appreciate how sweet success is after tasting failure.
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