I stumbled on an older article Brett Steenbarger posted last year: Second-Guessing: The Should-Have Syndrome
which I found really worth reading, as I missed it last year. And it got me thinking, which lead to this article today.
- I should have taken a stop, even if the trade turned out to be a winner. Last time it cost me a lot!
- I should have taken that trade, because all signals were there. But last time the same setup did not work!
- I should have held that winner longer, it was obvious, it would do the breakout this time, wasn't it?
Should have's ... can help you, as they are another way your inner self is corresponding with you. It's a discussion happening in real time in your head, when you are focused on the markets.
Listen to that voice, don't give in on it, but argue. There are times, when it is worth overriding that voice. If you are proven wrong, next time, it will be harder to override that voice!
At other times it's only prudent to follow that advice. Your trading plan is there for a reason and its rules are to be followed, unless there is real good reason to deviate. One rule may be that round numbers are usually Support / Resistance levels and you get out at them. They may break on the first test and leave you with a feeling of missed profits, but usually S/R holds on the first attempt, so getting out and locking in profits is only prudent as a daytrader.
Not taking a trade, you should have taken is a tricky one! But there is a reason for it. You just can't see it, as you are so frustrated with yourself.
It might be that you have personal issues today. Maybe you have no time for the trade as you have to leave in a short while or you have other things occupying your mind interfering with your trading. Be happy you haven’t taken the trade and get your things in order, so you can concentrate on your trading again.
But it might also be that your subconscious mind is seeing some flaw in your setup, you haven't identified yet and therefore have not integrated in your trading rules. Maybe your setup assumes high volatility and is just not working at its best in ranging markets. Your subconscious mind is extremely good at analyzing the markets and is signaling you just that. Of course, if the setup then works, you are frustrated not having taken it, at the same time ignoring the last 5 trades, where the setup worked just so or actually failed, but you still assumed that being do to the normal P/L% ratio of your system, when in reality it was caused by a market sentiment shift, you haven't acknowledged yet.
Try to deal with your Should have’s .. in a positive way. This will respect the parts of your mind, which are having problems with your current course of action and prevent them with interfering in your trading in the most unexpected way. Eg by flooding you with panic feelings, when a real cool head is actually needed. And it will actually help you in your trading, as it is always a good thing to be able to argue the reasons for your trade at any time.
If Should have’s … pop up in your head while in a trade, look at the position in an objective way, try to see it as a position your best trading buddy just told you about and he/she asked you, what you would do with that position.