How to Stay in a Trade When Others Bail

Get me out of this trade! On a recent trade, I was able to stay in the trade because I focused on price action.

However, my ability to stay in a trade and see it to fruition is not as nearly as reliable as I would like it to be. As I continue to work on this, I thought that I would at least jot down my thoughts that came about as a result of this trade.

Based on some of the comments and emails that I have received, this seems to be a common issue with other traders too and I hope these thoughts will help you too.

I dont' know about you, but usually when I bail out of a trade early, it is for the following reasons:

I didn't have an exit plan going in
I got nervous because because price became volatile
I didn't backtest the strategy I am trading

Volatility is OK, IF…

When things get really volatile, sometimes it is best to bail out, especially if you have a profit on the table. This is a judgment call and should be exiting the trade because the volatility is happening on the time frame you are trading on and not because you get scared out on a significantly smaller time frame.

For example, if you are trading on the 1 hour chart, it probably isn't a good idea to base your exit on the 1 minute chart. The 1 minute chart will give you a heart attack if you are really trading based on signals on the 1 hour chart. If you don't believe me, try it.

Yes, I have been guilty of this many times too.

Not Excusable

The other two causes are just simply sloppy trading. So what can I do to eliminate this from my trading?

Backtest every trading system thoroughly and be comfortable with the risks
Practice trading for at least an hour a day with Forex Tester 2
Log my target price in my trading log
Log the trading system that I am using on my trading log. Hopefully, that will remind me to only trade “approved” systems.