Stop Loss Blunder

Trading Discussion Trade Journals
1

First of all, I am a newbie. Thursday session was one to forget for me. I saw the analysis of GBPJPY in one of the threads around here and decided to enter the trade. I was so confident that the trade would go my direction and as a result I ended up setting a stop loss at a position that didn’t give the trade room to breath.

My trade reversed after I had stopped monitoring it and headed straight for my SL. My SL was triggered & immediately price changed direction and heading towards my expected target. By the time I noticed it was too late to jump into the trade and try to redeem something. Here is what happened in more than a thousand words.

gbpjpyh1.jpg700×525 84.9 KB

I will be careful next time.

2

A couple of points I can see that you may want to consider.

  1. The GBPJPY or “Guppy” as it’s commonly known, is a HIGHLY volatile pair. Since you’re a newer trader, you may want to stick to literally any other pairs until you’re more comfortable and confident.

  2. Your Stop Loss was placed mostly correctly. You always need to remember that S/R needs to be treated like a zone. So let’s say the 1.3000 mark on the EURUSD is serving as a strong Support. If you want to use it as a Stop, you’d actually want to set the value at like 1.2990. Most pairs are fine with a 10ish pip leeway. The Guppy you’d want 20-25ish.

  3. Your statement that “it was too late to try and jump in to redeem something” signifies a bad trading practice in the making. It’s commonly referred to as “Revenge” trading. Let’s say you did get back in time and saw it was starting to move in the other direction, you jumped in, and then it reversed and continued south. Now you just doubled your losses based on an emotional decision that assumed price must be moving back the other direction. That will screw you hard in the future.

If you win or lose a trade, you cannot let those emotions dictate your trading. If you get emotional because of them; do not take any trades immediately after. Some people use cooling off periods of anywhere from an hour to 24 hours to cope with it.

  1. Always remember that analysis is just an educated guess. You need to understand why you are taking a trade if you ever hope to actually be a successful trader. That way you can develop of an understanding of why a particular trade failed.
3

Thanks man, that was enlightening.