I’m analyzing my trades and I decided to analyze and tally contradictory signals.
I’m trying to understand contradictory signals. You see a signal to go short, then the next candle looks bullish. Do you close or hold?
Well, I’m trying to understand it and the trouble I had on a particular trade. Well, I zoomed out and saw that I shouldn’t really be paying attention to those kinds of signals. Some losses are just inevitable, possibly even necessary.
Bending the strategy to avoid those painful losses negates the strategy as a whole. That’s very unfortunate because who wants to take losses? No one, of course.
I think this is where I’m lying to myself. I have a strategy, but I want to catch some of these little trades that are quite profitable.
It should be better to reverse my position, catch this little trade, and recover from my losses. But unfortunately, that’s not how my strategy works. The hard truth is that there’s no room for those small non-strategy trades. Sure, they could be profitable, but they’re not strategic. These small trades are where I’ve accrued tons of losses.
Basically, I zoomed out of a trade and realized I was in between support and resistance. Price had bounced support and I’m taking all these little trades while I should be focusing on the big fish: when it bounces resistance.
Sometimes, very clean swings will develop in between support and resistance. That’s a different thing. But sometimes it turns into a wall of death in a mosh pit. And there’s no way to trade that successfully while following my strategy–the signals are completely different.
So, I’m doing these tallies, and I’m realizing that maybe I’m bending my strategy to catch these little profits. What’s very unpleasant about this strategy is that you can enter at resistance, have some nice profits even though price is still near resistance, then watch your profits shrink as price returns to resistance, your original entry point.
Why would I be ok with that? The problem is that the strategy requires it. And price could retrace back to your original entry, then go in your favor. Sure, you move your SL to BE, but then you could be compromising your proper entry.
That’s the difficult part: eating those necessary losses.
Just imagine you’re at R:R 1:3, and your strategy requires you to watch your profit turn to $0. That hurts.
But here’s the trick. What if you watch price return to your entry, you get stopped out, and the next signal you’re supposed to take is the big fish with R:R 1:20 over three weeks? That one loss now seems like not such a big deal.