A massive problem many traders face is clinging to a strong idea of what the market ‘should’ be doing. I’ve done it myself in the past the result has been a very frustrating decimation of my account and the giving back of profits after a healthy trend.
We all know that markets are unpredictable and that anything can happen – so why is adopting this mind set in the heat of the moment so difficult?
A lot of it is the result of putting a lot of work into your analysis and simply not wanting to see what’s in front of you when it pans out differently.
Also if you follow the herd (not recommended) or other people’s biases then that just reinforces it. Especially if you take advice from big name institutions who like to call where the market is going – and are often wrong…
On the flip side some of the best analysis you can see always presents an alternate picture if plan A doesn’t work out. I highly recommend you incorporate this into your analysis as well.
A great example of this is the Elliot Wave principle. Whether you use it or not, find it useful or not or believe it is a valid method or not – is beside the point.
One thing Elliot does teach and develop is mental agility through the alternate scenario. This is a built in “if I’m wrong then plan B will kick in which is…” failsafe. This immediately prevents you from getting married to your trade ideas and also gives you an alternate plan of action if (and often when) the market does the opposite of what you thought it was going to do.
So – how are you going to incorporate this into your trading?
As with everything it takes practice until you do it subconsciously, in the mean time when you analyse a chart or a trade idea add a step in your checklist for an alternate plan B scenario.
You could end up turning your losing trades into winners.