When your losses are mounting up? When you’re distracted? When external forces are driving chart chaos? When you consistently get bounced out of stop losses just to see a reversal, minutes later? Or, when you’ve been breaking your rules anyway.
Most traders break their rules constantly. That’s why success rates are so low. Other traders change their strategies so often, there is no time to see if the strategy works in the long run.
With the volatility we are seeing in the market currently, I suggest sticking to your script. Losses are part of the game, and as traders we can minimize our losses by zooming out of the chart. When the markets are dropping at these prices, don’t keep looking at your 1 or 3 month chart. Zoom out to the 6 or 9 month chart. Look at the 3 Year chart and see where the institutions are trying to drive prices during this “reset”. You will find zones that you thought would never be touched, but as we’re seeing now, nothing is impossible.
Another option is to turn your chart upside down. I personally feel more comfortable trading long, but have recently benefitted from going short. Remember your stop losses, and risks still apply as events seem to magically happen overnight. Find your zones, but look to get out of the trade as soon as possible. This way you avoid blowing your account.
Hopefully you keep some dividend stocks, and sell covered calls to keep income flowing, but taking less trades, at this time, is also not a bad idea. With your extra free time, you can be reading and studying this wonderful craft of ours. Happy trading!
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