When in doubt, stay out!… If you’ve been trading for a while, you probably have heard that saying. It took me a long time to realise that when I have doubts before entering a trade it is much better to rather not enter it.
Also, I’ve come to realise that the best trades are the ones that jump out at me, the ones where I can’t find a single excuse as to why I can’t take it.
Why do I stay out of a trade when I’m in doubt? Because:
- If there is doubt before a trade, it will likely continue for the duration of the trade which may cause stress / anxiety.
- When there is doubt during a trade, my confidence will be lacking.
- Doubt during a trade might cause me to close trades early.
- Doubt might tell me that the market environment is not right for my strategy.
- If the doubt is caused because I’ve entered trades for the wrong reasons (like FOMO for example), it might instill bad habits if those trades end up being winners.
- Doubt might signal that I’m not in the right emotional state.
- Doubt might be a signal that outside forces / opinions are interfering with my decisions / trades.
- It can cause anger / frustration when I’ve entered a trade with doubt and it ends up a loser (I KNOW I SHOULD NOT HAVE ENTERED!!!!).
… and doubt might mean there is a gap in my strategy. No strategy (especially the fully discretionary ones) will come out bulletproof after backtesting; chances are they’ll have holes in them.
So what to do when there is doubt?
I’ve found that investigating the reasons for why there was doubt works best for me. This is after I’ve decided not to enter the trade of course. Sometimes there might be a reason and sometimes nothing. Sometimes the reasons might be small, but it might come up again and again. But whatever the reason, big or small, investigating might give me something to work on; something to make me or my trading plan a little better.
Keep in mind:
One important thing to keep in mind is that trying to improve your strategy is not a bad thing. But remember you might get to a point that your strategy is so “robust” and has so many rules, that you are not getting any / very little trades out of it.
One last thing:
You might not always notice doubt before or during a trade, so you might have to work on that. One thing that helped me was practicing mindfulness.
Thanks so much for reading. Hope you and your loved ones are well and safe.
Thanks and Regards,
Trading SOS SOS