If you trade against your nature of going with the market direction you will
have trouble when markets are getting ready to reverse. You may look at a
chart and an indicator and see one thing, while another person who likes
to look for reversals may see something totally different. You will look for
every little excuse to get you out of a trade, you may get anxious and not
be able to hold as long as you should, and so on. However, if you are a
trader who likes reversals and makes a trade in a stock that is turning, you
will have different opinions as to what the market is trying to say. You will
come up with reasons why it will go down when someone else looking at
the same chart will see the opposite.
So who is right? Well, only the future will tell, but if you both have
strategies you are confident in, it doesn’t matter if you win or lose on a particular
trade. However, once you start getting wishy-washy on a decision
then you have a good chance of being wrong. After that comes one of the
deadly sins of trading and that is making subsequent bad trades to recoup
a bad trade. It’s quite common with new traders who haven’t learned to
take losses yet. Losses are part of the game, let them go and move on to a
new trade and forget about a previous bad one. Do not let losses eat you
up inside or lose sleep over them; just try and keep them small and learn
from them.
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