Many people have difficulty admitting when they are wrong. Trading is an area in which you must become comfortable with admitting when you’ve made a mistake. If you deny that you are wrong and choose to stay in a trade that is not going the way you expected, you risk creating a much bigger expense.
Expenses happen. Take a deep breath, and remember these three things when you find that you were wrong about a stock.
Stick with the system
What we want you to do in order to keep with the TRADEway system is to have small expenses. So trade based on lines. Trade based on moving averages. Trade based on the system you have been taught.
Be honest with yourself
If your original premise for doing the trade is broken, then don't convince yourself that something else might work. When that plan is no longer working, have the integrity to go ahead and stop out of that trade. Take the small expense.
Get ready for the next trade
It might be difficult to dwell on your mistakes, but take time to analyze the trade and determine how you can avoid a similar situation. View the expense as a learning experience.
Don’t allow pride to affect your trading outcomes. Be ready and willing to admit when you are wrong. Allow each experience to provide you with knowledge that will improve your skills and ultimately lead to the potential for greater success.