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1. Market Commentary
Hello Traders,
Wishing everyone a great weekend and good trading week to come.
Another article we published before but the information is timeless, for your weekend reading pleasure:
STOPS: Why Don’t We Keep Them
by RealityTrader on Jan 19, 2011
With everything said and written on the subject of stops, it should be a given that everyone is conditioned to keep them religiously even before they start trading. No matter what source a newer trader turns to, utter importance of stops will be underlined and emphasized up to the degree that keeping them heralded as the ultimate key to success. We all heard adages like “Take care of your losses, profits will take care of themselves.”
Do all the stern warnings work? Not really.
Time and again traders blow their stops, widen them in the course of a trade, hold losing position in the false hope for recovery. If this destructive behavior continues despite all the warnings, there must be deeply rooted reasons for this. As with most trading flaws, failure to keep stops roots in fundamental misconceptions about the very nature of the market and trading. Such misconceptions result in incorrect psychological makeup which, in turn, creates behavioral patterns harmful for a trader’s performance. In order to re-condition oneself it is necessary to work out fundamental, even philosophical if you will, understanding of the market as an environment in which a trader operates.
Let us list and analyze the misconceptions that cause failure to keep stops. Continue reading “STOPS: Why Don’t We Keep Them | Support and Resistance Levels”
