Well, let’s look at the situations in which a trader can pull a “lockout” position. The practical value of this part of the article is in recognizing myself and gaining psychological comfort (which is important) from the feeling that “I’m not the only one” 🙂
Example of locking number 1: “in pursuit of the price”
So, let’s imagine that I trade from horizontal levels. On the chart, I noticed a great entry point – with an understandable stop loss and take profit.
But since I like to look at small time frames, then on M1 I see that the price “something does not go to the level, but bounces earlier”.
And then a quiet voice in my head whispers to me: “I have to buy, I’ll leave …” And I buy. After which the price is oops! And falls to where I was originally going to enter.
The result at the moment: the price has gone where necessary, but I am already at a loss. And here I may want to block my purchase with a sale. The logic is this: I still expected a rebound from here. If it comes to a stop – at least I close the deal for sale in profit, and the final loss will be less. And if nevertheless, it bounces and goes where it is necessary, I will close the sale, wait for the profit on the purchase and go to zero.
Of course … 🙂 But the problem is that this approach will not allow you to consistently earn money: there is no guarantee that a rebound in the outcome will allow you to go to zero or reach a take.
Variations of such moments for locking can also be a “non-profit” of the price before the trend line, an “almost appeared” signal from indicators that appeared at the moment of candle formation, and not after it, many other things. Unites them all with the phenomenon called “Hurried”
The case of locking number 2: “As much as possible, already tired.”
There are 2 scenarios.
The first one is when a trader trades without stop losses, enters a trade and the price continues and continues and continues … And? He continues to go against him 🙂 And he is waiting, waiting, waiting for a reversal … In the end, he gets angry at the market and locks his losing position in the style of “you won’t be able to increase my loss for you”. I agree that it is absurd, but what happens, it happens. In this case, the trader usually does not make plans for the future on how to get out of the castle. He just enters the castle, and there be what happens.
The second is when a trader also trades without stop losses, but he seems to be “fighting” the market for profit. Suppose he bought, and the market continues to go down. The downward movement of the market, in this case, is regarded as a “malicious act” on the part of the market: “Stupid trader, why are you holding your purchase, because I am going down!” And then the trader does not stand up and makes a deal to sell. That “since you are going down, I am with you.” There is an attempt by the brain to predict the future in the current direction of price movement and the entrance to the deal, hell knows where and why. Most often this happens if before this the trader has already made several unprofitable transactions and “this market” is already tired of being such a reptile, figs understand him, he hesitated where to go as much as possible 🙂
In these two cases, in my opinion, the probability of getting out of the castle with less loss is extremely small. The trader expects a “clearer situation”, but this is comparable to the expectation of a clearer situation regarding how many people you will meet today 🙂
“Wait a minute … Does this wording mean that you can still get out of the castle successfully?” One of the readers will think. And yes and no 🙂 Let’s figure it out together.