/ Trading

Trade execution and finger freeze

As a trader you go to the effort of back testing a system. You work out an entry and exit strategy, fine tune your stop loss levels and are ready to go. Now for trade execution.

You watch the markets, the news, the stars and numerology until you find the exact point you want to enter the trade. You will short the GBPUSD at 1.6595

Let’s execute the trade

Price moves to 1.6592, you have the trigger finger ready. Trade execution is key. 3 pips more for price to hit 1.6595.

You’ve turned your chair to face north as that is good feng shui. You have your lucky undies on and you haven’t washed your trigger finger for a week.

Price hits 1.6594, so close, come on just one more pip. 1.6592 … bugger … 1.6593 … 1.6592 … is it hot in here? … 1.6594 … 1.6593 …. 1.6591 … 1.6589.

And so it goes on. Before you know it, the GBPUSD has plunged on European opening to 1.7522 and you’re lucky undies are now on your head.

All over 1 pip.

To trade long term, you need to be decisive, brave, yet responsible.

If this sounds familiar, then welcome to the club, leave your sanity at the door.

Finger freeze

I like to call this trade execution scenario finger freeze. When you just can’t execute the trade despite the trade filling 99% of your criteria.

That 1 pip costs you 50 pips and a new vase. Losing can be is frustrating. But missing a winning trade by one pip calls for a padded room.

So is that one pip that important to your trading system? If it is, there is a good chance you are either running stops too tight, or trading on too small a time frame.

Finger freeze can hit you on entry or exit. In fact calling it finger freeze is understating it. It is more than just the finger that freezes. It is the brain, the eyes, the bowels, your sanity. Everything glazes over.

Finger freeze has one common factor … fear. It could be fear of the losing trade, fear of tight stops, fear of commitment, fear of plastic mice.

To trade long term, you need to be decisive, brave, yet responsible.

When you are only one of these three, finger freeze is bound to strike again!