If you trade the Forex market you will inevitably encounter the proverbial down day (or worse yet a series of down days). By bad day I mean when you put on a trade and from 'pip' one just goes against you. Tell me, after this happened have you:
Chased the trade and ended up losing more?
Revenge traded against the trend to recoup your losses and ended up losing more?
Moved your predetermined stop and ended up losing more?
Flipped your position and ended up losing more?
Have you noticed a theme??
Well, when I have a series of losing trades I go into CSI mode!
I actually conduct a crime scene investigation on my trading. First if I suffer a big lost I close my trade station immediately. Experience has taught me that I am susceptible to revenge trading. After a break (could be several minutes or several hours or several days) I take a look at my trade journal and look for clues as to why I suffered a draw down. Keeping a detailed journal allows me to reconstruct my trades to isolate potential errors.
If I am lucky I found that I had sound analysis and execution, but just hit some losers. More likely is that I got away from my style of trading or over-complicated my technique and entered into a bad trade.
Go back to the basics! It works every time!!
Happy Trading!!
