Distinguish context from entry in trading.
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Many beginner traders confuse setup with trigger, which leads to unconsidered decisions. Let's take the situation where you see a potential setup for an increase in the stock price of company X. Without a clear understanding of the trigger, you decide to buy 100 shares at 100 zł each. However, the price drops by 2%, and you lose 200 zł. Another mistake is ignoring the spread. When buying shares for 100 zł with a 2 zł spread, you have to wait for the price to rise to 102 zł to break even. The third mistake is not setting a proper stop loss. You enter a trade without protection, and the price drops by 5%, resulting in a loss of 500 zł.
The main problem is the lack of distinction between context and entry moment. A setup is just a potential situation that may lead to a trade, but it doesn't have to. A trigger is a specific event that confirms it's time to act. Ignoring this difference leads to decisions based on assumptions rather than facts. The lack of a trigger in a trade is like opening an umbrella in the sun — an unnecessary action.
Assume you have a capital of 15,000 PLN. You enter a transaction with 10% of that capital, which is 1,500 PLN. Due to a lack of a clear trigger, your transaction ends with a loss of 3%. You lose 45 PLN on one transaction. Repeat this ten times in a month, and you lose 450 PLN, which is 3% of your total capital. In the long run, such thoughtless actions can reduce your capital to zero.
To improve your results, implement a few key changes:
Start recording your setups and triggers in a journal, analyzing their effectiveness.
Today, despite the lack of high-impact data, is not a time for distraction. Special attention should be paid to technical analysis and current events that may affect the markets. Traders should remain vigilant, especially during the opening and closing hours of the session, which may bring...
