Hello everyone. Tonight, I’d like to share with you a trade I made this afternoon where I went short on a position numbered $ZEC . In the end, the trade was stopped out for a loss.
First, let me tell you the problems I had in this trade:
1) I recklessly guessed the top of the trend and placed the order betting on it. We can tell from price action that this is a resistance area, but you shouldn’t easily bet here that it’s the top—that’s the first dumb mistake.
2) When the price didn’t move in the direction I wanted, I kept adding to the position, trying to make the price move in my favor through position sizing—that’s the second dumb mistake, and honestly the dumbest one.
3) After the price broke below the trend line, it continued to form even higher lows and higher highs, so the bullish structure had already been restored again—but I didn’t notice that detail.
Figure 1: First, I’ll briefly analyze the reason I didn’t rush to place the zec trade earlier, as shown.
Figure 2: The dumbest thing I did was: when the price didn’t go the way I wanted, I kept adding to the position again and again, trying to make big money.
Also, after the price broke below the trend line, wasn’t it still making new highs step by step? Why didn’t I notice this clearly reconstituted bullish structure?
In the end, the stop loss hit, and I lost a lot.
Looking back now, I realize:
I could bet that the price wouldn’t make a new high, or I could bet that the price wouldn’t break the trend line (it indeed didn’t break it, but it moved upward along it). We could also place a trade.
But, but… with trades like this, we absolutely have to use a small position size. The certainty is very low. So why keep adding to the position?
Well, no use crying—this was self-inflicted!
First, let me tell you the problems I had in this trade:
1) I recklessly guessed the top of the trend and placed the order betting on it. We can tell from price action that this is a resistance area, but you shouldn’t easily bet here that it’s the top—that’s the first dumb mistake.
2) When the price didn’t move in the direction I wanted, I kept adding to the position, trying to make the price move in my favor through position sizing—that’s the second dumb mistake, and honestly the dumbest one.
3) After the price broke below the trend line, it continued to form even higher lows and higher highs, so the bullish structure had already been restored again—but I didn’t notice that detail.
Figure 1: First, I’ll briefly analyze the reason I didn’t rush to place the zec trade earlier, as shown.
Figure 2: The dumbest thing I did was: when the price didn’t go the way I wanted, I kept adding to the position again and again, trying to make big money.
Also, after the price broke below the trend line, wasn’t it still making new highs step by step? Why didn’t I notice this clearly reconstituted bullish structure?
In the end, the stop loss hit, and I lost a lot.
Looking back now, I realize:
I could bet that the price wouldn’t make a new high, or I could bet that the price wouldn’t break the trend line (it indeed didn’t break it, but it moved upward along it). We could also place a trade.
But, but… with trades like this, we absolutely have to use a small position size. The certainty is very low. So why keep adding to the position?
Well, no use crying—this was self-inflicted!
