Should Not Trading On This Condition
As a trader, you always have a desire to do entry position and sometimes you push yourself to entry position. Traders spend a lot of time searching for the ideal strategy or trading system or the right entry level. But no less important for traders is to know when not to position entry.
There are times when a certain market condition can exist where the best system can fail, and very few strategies work. In this condition the opportunity for profit is very small. It can even turn around losers.
Yes, you should be able to hold back to do entry position. Experienced traders know when to not trade. They realize that if you push yourself on the condition, you may be at risk. These conditions are not in accordance with their trading style and can cut their capital or profits.
Beginner traders, usually still have a passion or are keen to enter the market. Continue to do entry position to cover the previous loss. Instead of restraint, they enter a market that ends in loss. It becomes dangerous if you keep trading with the aim of covering up the previous losses and not seeing market conditions (which do not actually fit your trading style). Often this trading position is already outside your trading plan, the profit opportunity is very small and only based on expectations, not based on analysis.
Each strategy has different performance on different market conditions. You need to know the strategy you use according to what market conditions. Some strategies will experience high profitability in the choppy market, while other strategies will perform well in the trend and long term market.
So you need to know and understand a system, and what kind of marketplace suits a profitable system. Overly fluctuating markets can destroy the scalping strategy, which searches for small and large profits. Ranging markets will thwart strategies that only succeed in long-term trends. This condition will trigger a lot of false signals.
You should also be able to determine when the market time is high profit and when is not the time. Market conditions are likely to be high profit is when the market shows the characteristics that fit your strategy needs. While market conditions have a low profit opportunity is when the market shows behavior that is not in accordance with the system that you apply.
Hopefully you can identify market conditions that fit your strategy.