What is a bad trade? This blog’s topic should greatly benefit your trading once you comprehend the principles and thinking behind it.
When most traders ask about their trading journey, they usually respond with how much money they’ve made or lost.
This is the incorrect approach to evaluating a winning or losing trade. It is extremely unwise to evaluate your trading progress in this manner.
Once you comprehend the ideas and thinking behind this topic, you should see a significant improvement in your trading.
When someone asks traders about their trading journey, they instantly respond with how much money they’ve made or lost.
This is the incorrect perspective on a winning or losing trade. It’s very dangerous to assess your trading progress from this vantage point.
For example, if your trading plan states that you should only risk 1% of your account on each trade, but a specific trade seemed so excellent that it couldn’t fail, you opted to increase your risk. If the deal was successful, the brain will seek to replicate that sense of achievement. However, the rules of chance will dictate that you will be wiped out one day.
Moving stops follows the same logic (a stop order is where you place an order in the market to exit a losing position). If you move your stop because it was getting too near and it resulted in the trade’s breakeven, you might be pleased. Wrong. If you move a stop and it goes back into profit, you’ve had a negative trading day because of the temptation to move a stop as it approaches. This will result in a slow bleed of the trading account.
A good trading day isn’t about how much money you made that day. It is about trading your plan without deviating from it and adhering to your risk management perimeters and strategy criteria. You can still have a losing day in terms of money while having a terrific day if you stick to your trading plan.
A bad day is when you break your rules while also losing money. And the worst day is when you break the rules and make so much money that you become a gambler rather than a trader.
My recommendation is that you develop a trading strategy and risk management criteria. You must ensure that each deal you make adheres to the trading strategy. An excellent approach to achieve this is to establish a checklist that you go through before each trade.
That way, you can ensure that your transactions are always good, and when your trades are good, profits will follow.
