Too often and too easily a trader jumps in to change course and deviate from a pre-determined course of action within a trade - and the result is almost always suboptimal. In fact one of the worst things that can happen to a trader is to have one successful outcome from changing a trade from the plan. That sets up a bad behavior and strengthens the "flight" part of the "fight or flight" equation.
A Trading Journal Is Self-Diagnosis
Don't misunderstand me - I'm not advocating sticking with a losing trade. Just be sure the loss you take is within the threshold for which you've planned. If a trader has a predetemined time in the trade and a stop loss to prevent a stock's freefall (in either direction), then let that trade run its course and live to call another play in the trading game.
This doesn't mean that a plan must be adhered to in the face of consistent losses either. Having a journal that records all measures of a trade makes such diagnosis possible. In this case StockPunk learns to select a different criteria for setting a stop loss and is rewarded.
Here's an excerpt,
"Finally, I get a trade that works out the way I planned it. This trade came from a NR7 signal using Trade Ideas ... In the past I would have trailed my stops using the 20EMA (green line) as my threshold, so I probably would have sold at 20.70. Corey at Afraid to Trade (my mentor extraordinaire) challenged me to change the way I was setting my stops and determining my exits when I spoke to him last week. I owe him for the success of this trade."
Popularity of NR7
On another note it is interesting to see the NR7 alerts within Trade-Ideas used more and more as a signal for interesting moves.
Here is WallStreetWarrior's recent trade using the alert.
We added this alert based on the feedback from TraderMike and I'm glad that we took his advice!