This can ALWAYS happen ANYTIME

The charts below tell the story exactly, I did get caught out by one of them, but only for my allowable risk so nothing bad, just a potential trade that did not work out, it will eventually.

Yesterday was the UK Governments Budget day and within the budget there was a nasty surprise for pension companies hence the charts:

There’s nothing you can do, for those buy and holders who were long they got hammered, and this is one of the risked I’ve previously talked about for buy and hold investors.

This is a classic example of why it is so very important to have set, rigid stops in place all the time.

I’m willing to bet someone has lost thousands by being caught out by that move yesterday and today they’ll be fretting, stressing and trying to find logical reasons for price to bounce back up – to which they’ll either be holding on in hope and praying for a rise or applying illogical reasoning to their charts as to all the reasons a bounce should happen – it’s obviously up to the market to make that decision, they might get lucky, they might get hammered even more – no one knows!

I bet some people where short too and had some great, although very lucky, profits.

Always use a stop-loss, yes they’re are pain when they trigger, but they are there for a reason, you placed it at a specific place based on your rules of the set-up – the real reason we don’t like stop losses when they are hit is because they prove and confirm that our thoughts/plans and trading decision on that market was simply WRONG and we don’t like being wrong do we! Welcome to trading, we’re we are wrong a lot of the time – you have to learn to live with it and accept it, it is hard though.

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