Market Reverses after my Stop Out...Frustrated?

very often, our losing trades get stop out and price promptly reverses, distressing us immensely. happen often enough, we start losing confidence. we begin imagining that the market has singled us out to be the sucker of the day, week, month.

after a while, we outsmart ourselves, by reversing our trade positions once we get stop out only to see price again going against our this next trade. we cringe, get more frustrated and throw up our hands in disgust and despair.

so, what do we do when we encounter this situation?

for the case above, where i put on a short term trade...and get stop out, do i open an opposite position? it depends....

but let's first deal with the stop outs... stop outs are capital preservation mechanisms and a way to profit from the market in the long run... it is a cardinal rule of trading...without this risk management in place, soon, the trading account will be depleted and emptied...

thus, a stop out is either to limit losses or a way of acknowledging that my market outlook is wrong...

a) if it is a stop loss mechanism, then, my market outlook could still be correct, except that my entry point was flawed...if so, i may look for a re-entry based on indicators...

b) if my stop loss was activated becos data supports to invalidate my original market view, then, i may look for a entry point in opposite trade...

but, from experience, jumping from a long to a short, just becos my stop was reached, should be avoided for one main reason.... emotions... very often, we allow the stop loss to emotionally cloud our decisions and we click the mouse before we have time to re-evaluate the situation bcos we are bent on wanting to recoup that earlier loss... this is very human...we want to stem the pain from the first loss...usually resulting in adding fuel to the burning fire...

if we only begin a position by being able to accept that pre-determine loss, it is one way to be less emotionally affected by that loss, when it arises.

some things we can read all we want... but until we actually try it out, we wont ever really appreciate the written text...

so, i would suggest that you start off with small positions, allow time and trades to guide you to become a better trader... no amount of reading can offer you the real experiences that only the passage of time can... good luck...and stay positive...

we must stay positive becos rookies and seasoned players alike, we will also make mistakes... the differences between those who bring money to their bank and those who lose their houses n the long run will only be

a) having risk management
b) patience
c) technically more skilled
d) life long passion for this business to overcome the immense pain of losses at the beginning..