How To Recover From A Losing Trade
Today’s two trades will be used to illustrate the mindset you must be in in order to recover from a losing trade.
30 Year Bond market has recently broken down from it’s sideways channel. Read more about it here.
In the article I asked you all to be aware of a coming downtrend in the Bond market.
My theory proved correct.
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This Is The Setup
The 30 Year Bond has picked a direction. Bears are in control. 4th day in a row.
Using my Fibonacci retracement tool, draw the overlay from the most recent high to the most recent low.
I am feeling good about getting short at the 50% mark. I like it because I typically like to get in around 8 or 12 ticks from the low or high as long as the Fibonacci levels are close.
We got short at 154’14 and placed our stop loss 5 ticks above. I always use a 5 tick stop loss.
In the same respect, I was watching the 10 Year Bond and noticed it too was about to make new lows.
Did the trade work out? No
We got stopped out.
What To Do After Having A Loosing Trade
I knew I was right on the direction of the trend. My entry was just terrible though.
The first and most important thing you need to do before trying to enter again is this:
“Breathe!”
If you don’t take ten seconds to clear your mind and breathe deeply then you will jump into the next trade hastily and loose again!
After You Clear Your Mind Determine If You Have Another Entry and Take It
I took another entry at 154’21, just below a daily resistance level I drew on the chart previously.
After taking the short position I held on tight. With certainty I had a target and I knew THIS trade would work out.
Here is where we ended up:
I stayed short for 3 hours. I knew where my target was and I didn’t flinch.
There was a tense battle for the Bonds to try and crack through the big round number 154’00 and it did shortly after the 10 Year Note made new lows.
Me and the other traders in the TopstepTrader chat room compared the battle to battle scenes from the movie 300.
Eventually I won and covered my position for 29 ticks!
Advice To Keep In Mind
In order to be a successful trader and a successful TopstepTrader you must keep a few things in mind when you loose a trade.
- Do not move your stop!
- Breathe and clear your mind before attempting another entry.
- Stick to your plan and be confident in your strategy.
- Get out if your plan is not working out the way you want it to.
Today’s ending P&L ended up at $2,250. Not bad for starting the day off with a losing trade.
Keeps studying my friends and get funded!