Sunday, October 9, 2011

Why do so many retail traders get stopped out?

Why do so many retail traders get stopped out, only to watch the market go straight to there target? I have found that most traders are right , but they are RIGHT at the WRONG TIME.

Every chart has 2 axies price and time. Do not just focus on the price, focus on the time as well. Time very well could be the more important of the 2.

When millions of retail traders go long on the eur-usd for example you can bet many of them have placed a stop in pretty much the same spot. The large commercial traders know exactley where we placed our stops and they go on a stop hunt. They stop everyone out and the market resumes in the direction you wanted. How many times have you seen this happen?

You have to learn that thousands of traders are seeing what you are seeing on that chart and probably doing what you are doing. So try not to do that. It's difficult and frustrating sometimes.

Retail traders do not move the market. News moves the market and large commercial traders move the market. All we do is try to hitch a ride in that direction.
Hang in there and learn to enter and exit at the right time. Your analysis is probably correct, now get the timing right.

Education can set the knowledge to what is a "good" or "bad exit, however you are absolutely right - it is a classic case of "practice makes perfect". Or better yet - trial and error, because you will most likely lose more than a few pennies acquiring these skills.

W.D. Gann said, "Time is more important than Price." Most traders do not place enough emphasis on Price & Time analysis. Rookies also have emotional blocks that prevent them from re-entering after being stopped out. Remember, "there is no shame in being wrong, but there is in staying wrong."

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