- I take the point of view that missing an important trade is a much more serious error than making a bad trade.
- If you make a bad trade and you have money management you are really not in much trouble. However, if you miss a good trade there is nowhere to turn. If you miss good trades with any regularity you’re finished.
- For example, let’s say the market moves rapidly through your buying zone and you miss it, you miss your buy signal and instead wait for a retracement to maybe buy cheaper. But, the market just keeps going higher and higher and never retraces. Now what do you do? There’s a great temptation to reason that now it’s too high to buy. If you buy it now you’ll have an initiation price that’s too high? No, the initiation price simply won’t have the kind of significance you suppose it will have after the trade is made. You can’t miss these trades.
- If you miss a good trade, you have nothing to protect you-that is, nothing in the system will assure that you eventually get in. Also, missing a good trade can be demoralizing and destabilizing, especially if you’ve been in the midst of a losing period. And like so many bad trading decisions, it ends up costing you more than just the money lost or not made on the trade. Missing a major trade tends to have a reverberating effect throughout your whole trading strategy. Sometimes it can be weeks before you get back on track.
- Trading systems force discipline to make sure these trades are not missed.
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