Why You Shouldn't Intervene in Trading?

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Have you ever adjusted your stop-loss or take-profit level when the price approached its stop-loss or take-profit level? Do you think it's the right thing to do?

Adjusting stop loss or take profit is a form of trade intervention. Trade intervention means influencing executed orders with the aim of avoiding losses or securing profits. There are many forms of intervention, including adjusting stop loss and take profit, removing stop loss and take profit, closing trades prematurely, and many more.

In essence, intervening is not justifiable if you adhere to good trading principles. Intervening violates the discipline and consistency that traders have long believed to be key to success in trading. By intervening, you're essentially deviating from the trading plan you've previously established, indicating a lack of discipline and consistency.

Furthermore, after intervening, you transition from being a trader with a well-thought-out plan to one with no plan at all. Trading without planning is poor trading, not based on rationality, and tends to be speculative. Trading in this manner is not accurately termed a business but rather gambling.

Causes of Trader Interventions:

Everything has its reasons, including trade interventions, which are caused by specific trader behaviors.

The first factor driving traders to intervene is a lack of understanding of the potential of the trading method they use, leading them to never fully trust the outcomes of their trades. Therefore, they don't hesitate to alter their trades midway.

Next is traders employing excessively large risks. This is often fueled by overconfidence, leading traders to believe they'll definitely make a profit. Consequently, they dare to take on greater risks, exceeding the risk limits they can tolerate.

Another factor is traders monitoring their trades too frequently. While this enables them to keep up with market dynamics and changes, it also puts them at risk of intervening in their positions.

Why is Intervention Bad?

Let's consider an opposing viewpoint. Perhaps you prioritize flexibility over discipline and consistency. You may feel that intervention is a good action because it aims to salvage your trades from potential losses. But, what guarantee do you have that intervening will improve your trade outcomes?

Have you ever been in a situation where your position was close to hitting TP but then reversed and hit SL? If you've experienced that, isn't it equally possible for the opposite scenario to occur? Isn't it highly likely for you to be in a situation where your position is close to hitting SL but then reverses to hit TP?

When you intervene in the first scenario, such as by closing your position prematurely, the outcome is good because you avoided losses. However, if you close your position too early in the second scenario just because you anticipate the price hitting SL, you'll miss out on the profit you should have gained.

The issue is, how do you know whether you'll experience the first scenario or the second? Well, you can't possibly know, right? Therefore, you also can't ensure whether the intervention you make will yield better or worse results. So, if you can't guarantee the outcome, why do it? Wouldn't it be better to stick to your trading plan?

#OPINIONLEADER#