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How Trades Go from ‘Bad’ to ‘Worse’

One of the trickiest parts of the market is that even when you are following every single rule of your strategy, you can still lose money. With that being said, I want to “talk context” in this video that can hopefully shed some light on why this may be occurring to you and your trade set-ups.

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Transcript:

Bad going to worse,here's how it happens a whole lot of the time.Right off the get-go I'm gonna talk about thismore from a day trading perspective,however the general philosophy,the general idea does apply no matter what your strategy is.So I don't want you to think, you hear the word day trading,ope, this is totally irrelevant.No, no, no, I'm just gonna use day tradingand my experience with itto illustrate a bigger factorbut now if you are a day traderor you want to be a day traderyou better pay attention very quickly'cause yeah, this is how things truly go from bad to worseand it makes sense when you stop and think about itand when you understand the context of the market itself.So what I want to do here is just kind of illustratea timeline here and this timeline is just representingthe course of a day.So for those of you in the eastern time zonethat would be 9:30 a.m. to 4 o'clock p.m.Like I said, eastern standard time.So that's what this line is representing.Within this thoughyou have kind of the zone herethat I'm gonna call primeand I'm not gonna assign times to this becauseit varies slightlybut just understand that right at the get-go,the opening morning session,that's where the majority of the volume happens,that's where a whole lot of volatility takes place.And then all of a sudden from there you have,that ends and you have more so,the afternoon.And then right here you basically have,we'll just call it 30 for the final 30 minutes.And what happens a lot of times,well let me take a step back,afternoon, yeah I'm not saying, 'cause like I said,none of this is like written in concrete type of rulesbut in a general sense afternoon, things slow down,things get choppy, volume just tapers,it just gets a little weirder, it's not quite as fluid,it's not quite as liquid as during that prime timeright out of the opening gates portion of the day.So what happens a lotand like I said this is me speaking from experienceso this is not like I'm judging or anything like that.Sometimes, you know, a loss is gonna happen.And losses will happen whether you're a professional,I mean losses happen to everybody so let's get that out.But really the underlying context ishow do you feel about it?Meaning, oh!I broke those rules, I agh!And you get upset, you're,oh I should have done that but I did that.What was I thinking that made no sense within the context.And you're just upset, you're frustrated.Or you can feel kind of, alright hey you know what?Losses happen, I did everything literally to the T,I dotted all my Is, all that.And I still took a loss but hey you know what?The market, there is no such thing as a guarantee,there's no such thing as holy grailso losses happen so alright it is what it is.Let's circle back to that first one though.When you kind of do something stupid that causes a lossor you feel like, agh,you're just upset at yourself, frustrated.You know that can spark the whole,well you know what I'm gonna keep on trading'cause I wanna get this right.So let's think about this.I'm not saying that you are going in therewith the mentality of like a revenge trader,of oh I'm so mad, I'm gonna go get it back right now.No, it's, agh, I screwed up, that was not good,okay I need to, let's just keep at itand lets just keep plowing forwardand I'm gonna trade right now.So it's a noble attitude, there's nothing wrong with that.However the one thing that a lot of people overlookis that usually starts to happen right here.During what portion?The afternoon.So now you're out there,like I said, it's already started at badbecause as we establishedthis is assuming you're upset at everything.And then you go out there and you try.You try, you try, you try.To do everything according to the rulesand you try to spot and you're fine,like I said none of this is basedout of spiteful revenge trading or anything like that.You are trying but because of the functionof the time of day you are tradingthings can go off the track very, very quicklybecause now you're trying to pull profits from the marketin what really is not the most ideal setting.Again generally speaking.Maybe there's some strategy out there as a day traderwhere you're like, yeah,this is my prime time territory, I need to avoid that.But as a whole especially for methe morning session is where it's at for meand if I go and try to trade in the afternoon,now can I, have I?Yeah of course,but what a lot of newer people are not aware of is,this is just a whole nother monster out there.That's a whole nother ball gameand that's where things can,oh yeah things are bad and all of a sudden wow.Now I'm taking even more lossesand now maybe that feeling of revenge trading comes inand the worst just keeps getting worstand things just spin out of control.And the crazy part, the ironic part,the cruel part of the markets is,what you're doing may still have worked like a charmduring the prime time'cause that's kind of when your strategy more so works.But because you're doing everything else,but it's just the afternoon context.Like I said, things can go off the track very, very quicklyso how do things go from bad to worse?Well at points it has nothing to do with your strategyother than the context of whenare you deploying your strategyand if your strategy is built morefor the dynamics of a prime time versus afternoonthat is how things are gonna get really worseeven if you're sitting there saying,but I followed all my rules,how do I have even a bigger loss now?If I had a guess,my guess would be it has something to do withyou probably trying to get out there in the afternoonwhere it's just a chop festand things aren't nearly as smoothas what they normally are.So just be aware of it, kind of just an FYI.Something that I've learned,something that I continually need to be aware of.Because yeah,of course I take losses and when I take a loss,agh, you want to get back out therebut sometimes getting back out there,if that's pushing you into this session,it's something you need to be very awareand very careful of.If you are out there trading alone currentlyand maybe are in the market looking for a community to jointo assist you in your trading or to just help you,give you another set of eyeballs,then I do have a private trading communitywhere you can trade alongside meand other experienced traders.So what you see popping up on the screen right nowis both an information link,so if you click on the Inner Circle onethat is going to take you to the pagewhere I explain all the detailsof what exactly come with the community,both the chatroom and the newsletter.And then the other image that is popped upis a behind the scenes tour where you can see exactlywhat is going to be contained within the community.I take you through like I said,a behind the scenes tour of everythingand that way you'll know preciselywhat you are getting when you join.So definitely check that stuff out if you are interestedand thinking about wanting to join a communityand let me know if you have any questions.

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