What do you do when you don't understand your own trade?

Every trader has opened a position and realised they couldn't explain why. It usually happens under boredom, FOMO or pressure, and the correct response is the same every time: close it.

What do you do when you don't understand your own trade? — risk-reward diagram
A risk-reward ratio of 1 to 2

Have you been there?

  • the trade and the (lack of) reasoning
  • what you did and what happened
  • the check you run before entering now
What do you do when you don't understand your own trade? — candlestick anatomy diagram
The parts of a candlestick: wick, body, open and close

If you can't write the reason in one sentence before entry, there's no trade. That's the whole rule.

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