When it ALL goes wrong

Bad week on the trading front, all losses.

What do you do?

You just carry on and look for the next set-up.

Your left questioning what you did wrong, but if you did nothing wrong and the market simply moved opposite to what you were expecting there’s nothing you can do, those losses will be recouped over the coming weeks I’m confident of that, but what if the next set of trades go wrong?

It is perfectly possibly that they will, but I am confident in my trading set-up that I will recoup and more than make up for them losses during the year.  Remember I am confident that my trading system produces 70%+ win:loss ratio per annum –  The laws of probability say that it is perfectly possible for me to receive 3 -4 losing trades IN A ROW – I am always aware of that fact.

It does NOT stop the pain of having a loss though – I like to beat the market!

Let’s look at how much I actually lost compared to what I could have lost if I didn’t have a stop in place:

I’m just showing 1 chart, however I had  4 other trades on the go on different markets that lost money and stopped me out – these other trades were in a virtual identical position to the MKS chart above.  In that

  • An established UPTREND was in place and had been for weeks
  • The 8 EMA was above the 21 EMA, which was above the 34 EMA the only slight concern was they were flattening out
  • Price had pulled back for at least 2 days
  • The DTosc made a BULLISH reversal and the Weekly DTosc was near the OS zone
  • All suggesting a go long trade

So that’s what I did, placed an order to buy once price went above 379.81, stop @ 370.59 – got taken into the trade and a profit showing for 2 days – then BANG, the market turned and hit my stop, causing a losing trade of 2.42% (of the share price – not my account).  You can see from the last bar on the chart that price went a little lower and closed around where my stop was (remember I was OUT of the trade by then).

What went wrong?  Nothing from my side, the only thing that went wrong was that the MARKET did not do as I’d planned and I can’t control the market – it controls me, hence why I have a loss for the week!

The DTosc was bullish, the ONLY reason that the (8) DTosc is now bearish is from price action – the big down bar of 2 bars back did NOT reverse the DTosc from bullish to bearish, the last bars action on the chart made the crossover bearish reversal, when I got stopped out the (8) DTosc was still bullish – in that the value of the BLUE line was greater than the value of the PINK line.

This is the point when the DTosc indicator FAILS – as I mention throughout this site, NO indicator is perfect, they simply display the momentum of price action – NOT price action itself.

What now?

Pick myself up, dust myself down, raise my fists for the next part of the fight – The very next (8) DTosc bullish reversal will be my filter to consider another long position.

Why? – Because the trend is still to the upside, the weekly trend is still up, the weekly DTosc is now very much in the OS zone – It’s also time for a few clicks of the old Fibonacci tool to try to establish a patch of Fibonacci support levels that might hold out – price is already smack bang on one as of the last bar, but there’s more clusters lower .

I’ll simply monitor those market as usual and take the next trade signal – regardless of the fact that I just got caught out by a series of 2-3% losses.

It’s very very very important to understand that although I lost 2-3%, it was on the share price (diff between my entry and my stop) NOT 2-3% of my account balance, across the board the loss on my entire account balance was about 1.5%, so I can live with that and live to trade again.  If you do not understand this you need to sit down and think about it and the concept.

From the positions of the DTosc’s on the daily charts I’d expect sometime late next week for the reversals to occur, that means a week of simply monitoring the end of day charts and DTosc position – It’s the Easter Hols too so I might have a few days off with the kids and forget about the markets until the evenings.

Saying that though there’s always the indexes and forex markets to look at and trade!

I’ll end on the fact that what has happened to me this past week is RARE, it does happen – about 2-3 times a year but when you are taking 10 times more trades throughout the year it is only really a minor thing – the trouble you could have with this is if you get “spooked” by the loss, stop trading, don’t take the next signal, miss out on a fortune (or at the least the chance to recoup the losses) and then regain your confidence, take a trade and get hit by the same outcome – remember probabilities, the fewer times you act on your trading signal your increasing the probability of being hit with a loss again!

Hope it helps and I wish you all a very Happy Easter

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