When you get back to even - quit?

The best traders cultivate a bad memory. Just like Kobe Bryant, the previous shot, good or bad, does not influence their decision whether to take the current shot.

After a bad loss, you need to do whatever works for you to regain your ability to trade from a neutral standpoint, without emotions affecting your trading decisions.

For you, that might be (a) get back to B/E; then (b) take a break for some period of time--whether five minutes or a few days--until you can start fresh without being affected by the prior trade.

I find that setting up rules in advance to cover most possible situations works well.

If you have rules set up that say x amount or number of losses per day, or in a row, or per month, are within the normal limits of your system, and x+y losses are not and thus require a particular action, all the agonizing disappears from trading.

After each loss (or gain), you either shrug it off as normal, or you take the action prescribed in your rules.

For example, a multi-step rule that says
1. after x losses in a row ($, %, or drawdown), you must cut your position size
2. after x more losses, cut position size again
3. after x more losses, go back to paper-trading
4. if losses continue, consider changing your system, etc.
This is what would be imposed upon you if you were working for someone else--you would have maximum allowed losses for the day, week, month, etc.


PS What do you do if you don't get back to B/E on your next trade? Another rule: Never enter a trade without knowing how you will exit.
I guess what it all comes down to is: Do you have a rule-based trading system or are you just trading by the seat of your pants?
 
George C Scott in PATTON movie. "I do not like to pay for the same real estate twice"

Ok, we all will get stopped out. But, getting stopped out should not be so large as "what do i do when i get back to even".

Take the loss and just take the next signal and move on. if your signals are sound and you are trading sweet setups etc, then a loss here or there is just part of the game.

Yes, after a couple early losses one is going to think about getting back the lost real estate. But, you did not lose the battle.
 
the market does not care where you entered or where you want to exit.

a big part of my edge is thinking exactly that - where would the retail traders be entering, what would their target be, etc. and NOT being on their side.

one of the reasons why TA works, as others pointed out, is that traders are human being - thus, they trade psychologically

for example, if a bunch of traders sell at price X, then price X is their breakeven. that is why support and resistance form in the first place - because of how traders set up their orders, and in a VERY large % of the time, traders who are in a losing trade will hold on and pray for breakeven (and even double down in many cases to improve their average price - while taking on more risk) because they don't want to "lose"

and when the market REALLY moves (up or down) you can be almost assured that in most cases, the majority of the strength (or weakness) is due to traders being caught too far on the wrong side, and the cascading effect of stops being hit, margin calls, etc.

but back to the original question - whether or not you are at breakeven should be 100% irrelevant to your trading

the market does not know or care how much money you won or lost, and that # should not affect your trading decisions. sure, it's probably good .for a # of reasons to set an uncle point (a max dollar loss that will cause you to stop trading for the day), mostly because when you are down big it is VERY difficult to trade unemotionally.

but as for breakeven - trade your setups and IGNORE the P&L (during the day).

if you concentrate on the money, you are being 100% illogical because how much $$ you won or lost is 100% irrelevant to the structure of the market, and whether or not it provides your setups to you
 
Quote from illiquid:


But practically speaking, one rule of thumb I keep is that if I ever take or adjust a position that was purely based upon an attempt to get even or recover p/l, the stop goes to even once it's there. There's a part of me that really doesn't want to reward that kind of behavior, I'd be better off if every attempt resulted in a nice fat loss. :)
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Nice rule. Smart rule.
 
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