One of my important methodologies of trading is that every stock has a very specific point in time to buy it that will give you the best reward/risk from a chart pattern perspective. I don’t look for stocks to trade, I look for patterns to trade.

Once a pattern has been identified I watch for an entry. Once that entry has passed, and if I miss it, it is eliminated from my watchlist. There’s no trying to bend my rules so I’m able to get in “fear of missing out”. There’s no watching it the next day, week, month, etc to see “what would have happened”, which only serves to torture my trading soul.
So many times I’ll be talking to a trader and they’ll say “have you seen what stock XYZ has done today?” and I’m literally shocked that they are still watching that stock. This happens all the time with many different traders and I got to wondering what causes this behavior.

Here’s what I’ve come up with and feel free to add anything else in the comments section below.

  1. Inability to locate new stock plays.
  2. Unable to trust in trading methodology.
  3. The need to play out a  “what if” scenario to satisfy ego.

By continually focusing on previous stock plays without any real objective is very dangerous to your trading, as you are essentially living in the past. It’s vitally important to only trade from the present state with one eye on the future. The market is a forward looking mechanism and it’s important to have scenarios in play for whatever the market may throw at us.

If you sell a stock that you were long, and it experienced a correction that caught you off guard causing you to exit even though you “knew” it was going to go up, it will only frustrate you to know that the stock indeed did go up after you took a loss on the trade. We are a product of our last three trades and if you are constantly reminding yourself that you lost money and not only that, you missed out on potential profits it will negatively effect your trading. The constant negative reinforcement will cause you to fail to pull the trigger on the next trade or maybe sabotage other trades you may currently be in.

The solution is to take the time to develop a trading methodology that suites your trading style. Decide on what stock setups you feel comfortable and establish stops and potential areas to take profits. And let go of the stocks that you sell if you have no real intention of entering the trade and you just want to see “what happens” after you’ve sold. We’ve all been there as traders where we go back and check past stocks, but trust me when I say that does more harm than good.

2 Responses to “Learning To Let Go Of Past Trades”

  1. Steve P Says:

    I do agree that it is sometimes torture to watch subsequent price action of missed trades. I often wonder if the inner masochist in me compels me to do this. However, I have come to realize there is is much benefit to sometimes, not always, playing this woulda, coulda, shoulda game. The reason is quite simple: we must always be checking for Type I and Type II errors in our systems and these missed trades serve as our control group. In fact, to ignore the outcome of missed trades strikes of fear. I believe a trader must courageously search for the truth–no illusions, and the method must be to collect as many data points as possible: done trades, missed trades, winners and losers–with an egoless intention of fairness, detachment, and a willingness to change.

  2. jeff pierce Says:

    I agree. It it’s for scientific purposes then I’m all for it. If it’s because you want to see what happened for the sake of seeing if you were right or wrong, then I stand by it’s better to not check.

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