How to Know When to STOP TRADING | Binary Options Training
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And once I start seeing that the market is consistently, across several pairs, not respecting support and resistance, guess what I do? Do I go into recovery mode? No freaking way! No way, Jose, am I gonna go into recovery mode. Because the market is not respecting support and resistance.
How to know when to stop trading, like you’re losing and how do you know when to stop trading?
You know like, a lot of times people will say something like if I’m 20% down on my account, I’m just gonna stop the screen share. If I’m 20% down on my account, I’m gonna stop trading. If I’m 30% down on my account, I’m gonna stop trading. If I’m 10% down, if I’m 40% down, 80% down on my account, I’m gonna stop trading. And they use a percentage of their account as the benchmark, as the measuring stick on if they are gonna stop trading. And I want to tell you that is absolutely asinine. That is the worst idea you could possibly do. And I’m talking, it is verifiably, objectively a terrible idea. Absolutely a 100% terrible idea. Why?
Because, does the market know and does the market care how far down on your account you are? I mean, no, it doesn’t. So how is it that if you’re 30% down on your account, that just means that you should just get out of the market? Because now all of a sudden, the market’s not gonna give that to you. Like, what? And you might say, okay, well, I’m 30% down on my account. And so clearly I’m not trading well, and therefore I need to stop trading. And I guarantee you, that’s never gonna work. I promise you that’s never gonna work. Why?
Because your brain is gonna then automatically think, okay, man, I’m down 30% of my account. I’m down 50% of my account, but what if my next trade is gonna win? Who has done that?
And then you place your next trade and it loses. Yeah, exactly, Kirsten, 100%. It is an unworkable system to use a percentage of your account as the benchmark for if you should stop trading. Because here’s the next thing that happens people. Kirsten, I’m gonna ask you because you were so brave to answer right there. When you, like have you ever successfully stopped trading on a day when you’ve had losses? Yes or no? Yes. Yes, but it’s hard. And you’ve done it. Good.
And there’s a whole thing to look at as to why it’s hard. And it’s beautiful. It’s an amazing discovery. And Claudia, you have as well. Okay. So you’ve stopped. Good. You’ve had losses and said, I got to stop trading. And now here’s the question. Here’s the big question. How did you feel about yourself when you stopped trading because you were down? How’d you feel about yourself? Not good. Okay. Uh-huh. Kirsten, what about you? Not happy. Yeah, it felt kind of crummy. Exactly. And it’s usually whatever those crummy feelings are, they are geared, they are directed toward you as an individual and how bad you are, how bad of a trader you are, how bad of a decision maker you are, how bad, it’s all about how bad I am. And you walk through the rest of your day knowing I am bad. Why?
Because your decision was based on losses. And what does loss mean about a person? It means you’re bad.
And how empowered are you gonna be to go into trading the next day? And now let’s take this a step further. If everything is directed to how bad I am, how bad you are, and you need to stop trading. Do you want to feel bad about yourself? Like do you wake up in the morning and say, I know what I want to do today. I’ve got the best idea ever. I want to feel bad about myself. That sounds like a fun thing to do. Let’s do it. Like you don’t do that.
You might wake up feeling bad about yourself, okay. But you’re not gonna wake up saying, today my goal is to feel bad about myself. So now, think about this. You stop based on your you know getting the losses in your account and all that type of stuff. And you start feeling bad about yourself. Well now, you actually need to stop. Now you come to the decision where I need to stop. Well, stopping means you’re bad. So you’re gonna do whatever you can to avoid being bad. So you’re not gonna stop. It’s an unworkable situation.
Because first of all, you’re making a decision based on what the market has nothing to do with, X percent down in your account. And the next thing is you have to make a decision that’s gonna prove to you how bad you are. I’m sorry, that’s not gonna happen. You’re not gonna be, you might possibly be as disciplined as Kirsten here and physically shut down her computer to stop. But are you gonna be able to do that again? Maybe you can do it a second time, but can you do it a third time? I’m guessing no. It’s an unworkable situation. So what do you do? You just keep on trading? What do you do?
So you have to find an objective, I call it, algorithmic way of knowing when to stop. That has literally nothing to do with you and has nothing to do with how far down your account is. You have to find something that’s a clear reason. Because let me ask you, if you’re driving down the road, you and I are in a car, and you’re driving, and I give you $500, are you gonna just roll down your window and drop that $500 out the window? No, of course you’re not. Of course you’re not, why? Because you know you’ll never get that money back. And you know, it just makes no sense. You can objectively say that is a bad idea. And it’s objective. That’s not just personal taste. Oh, I like green, you like blue. No, you can objectively say that is a bad choice to drop $500 out the window and keep on going. Now, maybe you just like to give randomly, like you’re kind of doing some random acts of kindness. But even in that, you probably wouldn’t just drop it like that. You probably would be a little more strategic in your random acts of kindness, but nonetheless. So you wouldn’t do that, because it’s objectively a bad idea. So how can we create something around that is an objectively bad idea that’s just clear, that’s obvious? Like, there is no way I’m gonna drive my car into a concrete wall on purpose. It’s objectively a bad idea, and you’ll never do it on purpose. Well, let’s take a look at that.
When and it’s and it really has a lot to do with what I call stage of development number two. Stage of development number one is recognizing what a high-quality support and resistance level is.
You gotta know what a high-quality support and resistance level is. And not all support and resistance is created equal. It’s just not.
There are some support and resistance levels that are better than others. And some support and resistance levels that are just crap. So you don’t take those. But if you don’t know what a good quality support resistance level is, then you can’t move on. So that’s the first thing. And I’m not gonna go into all of that right now. But when you know what a high-quality support resistance level is, then you can start moving into stage of development number two. And what is stage of development number two? It’s recognizing when the market is playing your game. What does that mean?
That means that if you step on a tennis court, but the market steps on the same tennis court. And the market has a tennis racket and a tennis ball, but you have a basketball. Guess what? You two aren’t playing the same game. And guess what? You don’t stand a chance at winning, because you’ve got a basketball on a tennis court and don’t even have a tennis racket. You cannot win.
You got to make sure you two are playing the same game. So what can you do? You can just simply look, how is the market doing with support and resistance right now? Is the market reacting and responding to support and resistance? Yes or no. If it’s not, why on earth would you continue trading?
There’s literally no reason to continue trading if the market is not even reacting and responding to support and resistance. It makes zero sense. That would be equivalent to driving down the road, like I got a good idea. I’ve got $500 here, I’m gonna drop this out the window because I know in one more mile in 3.6 more kilometers, I’m gonna find $1,000. So one two three go and you drive drive drive, one mile goes by, where’s the thousand dollars? I knew there would be a thousand dollars here. I knew there would, but it’s not there, why? Because it’s not gonna work. It’s a losing strategy.
So, if you recognize the markets not reacting and responding to support and resistance, don’t place a trade. Now, how can you know that? Because if the market just blows right past the resistance, does that mean the markets not playing a game? Nope, it just means it blew right past it. You need to have a calculated way of knowing if the market is respecting them and how can you do that? This is how I do it. This is 100% how I do it.
First of all, before I start trading, I take a quick glance. How is the market responding to support and resistance? And if I see that it is regularly breaking through them, by regularly I mean three times or more, and feel free to take notes, then I just say, all right, I’m gonna reduce my risk or I’m not gonna trade. If it is responding the way that I would expect when it gets the support and resistance, then I’ll trade. But then what do I do? What do I do? I place the first trade and let’s just say my first trade loses. Whatever, trades lose, doesn’t matter. I place a second trade, second trade lost. Well, whatever, that didn’t feel very good, but it lost. And what I immediately start doing is I start looking, am I placing my trades at good spots, yes or no? If I am not placing my trades at good spots, I know what to do. I start placing my trades at good spots. If I am placing my trades at good spots, I know what to do. I place a third entry. I place a third entry and it loses. Alarms go off. What’s going on here? First of all, am I placing my trades at good spots? No, I’m not. Well, I know what to do. I start placing my trades at good spots. Duh! It has to do with me. It doesn’t have to do with anything else. I just got to place them in good spots. That’s easy to do, because all I have to do is just click when it’s time to click and don’t click when it’s not time to click. That’s it.
So then, all right. So if I am placing my trades at good spots and those three lost, then what do I do? I look, how is the market moving? And I look across all of my currency pairs. Is the market respecting support and resistance there? Is it respecting support resistance there? Is it respecting support and resistance there? And once I start seeing that the market is consistently across several pairs, not respecting support and resistance, guess what I do? Do I go into recovery mode? No freaking way. No way, Jose, am I gonna go into recovery mode. Because the market is not respecting support and resistance. Why on earth would I go into recovery mode and increase my risk? Now I’m just losing money faster. I don’t know about you, but that seems like a dumb idea to me.
So I look, I’m like, ah, look at this. Mark, it’s not supporting, respecting support resistance. What do I do? You know, I take my thoughts and I put them underneath my booty. And I sit on my thumb. That’s it. And Guess what? Guess what guys? It is so easy to stop trading. Because guess what? The reason I’m stopping trading is because of the market. The market’s not giving me what I want.
Why would I place another trade? It is objectively bad. It is objectively a terrible idea to place another trade. Why? Because it’s the same as me taking that $500 and throwing it out the window. You know if you just place another trade it’s not gonna work because, across the market, it’s not respecting them.
No reason to continue whatsoever. And guess what? So now it is something that is objective, algorithmic based on how the market is moving and it has nothing to do with me as a person. Literally nothing to do with me as a person. I don’t need to prove that I’m not bad. Actually, I feel empowered by stopping. I feel like, my goodness, I kind of rock. Look at that. I could see what the market’s doing here. I’m actually awesome. This stopping is all of a sudden naturally and automatically becomes evidence of how awesome I am. Like who’s not gonna do that? Like it becomes so easy. And instead of now me I need to keep trading to prove to myself I’m not bad. Now, me stopping trading is evidence that I can see something in the market that maybe other people can’t see and it’s evidence that I’m pretty much a big deal. And maybe for you that’s not important, but for me it kind of is. I don’t know why. It doesn’t matter why, fact and matter is I want to feel good about myself, maybe you do too. I guarantee that you don’t want to look bad I guarantee you do want to look good. I promise you that. That I know 100% for sure.
So all of that wrapped up together, looking for an objective reason to stop. And now you’re gonna just take a first entry, a second entry, and a third entry. And if you don’t like the way the market is after you lose a third entry, stop.
Very good question here. When you stop trading due to current market conditions, do you tend to stop trading for the entire day or could you try to test out the other markets later that same day? The market changes on average about 45 minutes. So I’m gonna go and I’m gonna check again. And what am I doing? I am watching. I am simply watching and I am looking to see, will the market respond to support and resistance the way I would expect it to respond, three times in a row. And if it does? I’ll enter into the market.