One of the most important steps I've taken to become a better trader is to periodically review "missed opportunities". While there is a seemingly infinite number of stocks that can be reviewed, I narrow it to stocks from my watchlist.
A stock that is always on my watchlist that I missed out on is SINA. It's a mainstay in the "China stocks" wing, and had moved into my primary list as it based under $30. Technically, it was a beautiful setup. We had a cup and handle formation that had yet to breakout. That's what moved it to my primary list. Once breakout occurred, MACD turned positive, RSI was strong and volume had picked up. This is one of my favorite entries, and for some inexplainable reason, I passed on it. I've been riled up over this missed trade for the past few days.
Why did I pass on it? Looking back, I had placed a note in my watchlist that said, "I have been burned by hot Asian before". Anybody remember my REDF trade? While I only suffered a small loss on that trade, for some reason it had a negative impact on me. So much so that it made me doubt a beautiful technical setup a week later.
What I learned from this review is I must have a short memory when it comes to bad trades that were made from good setups. When I enter a trade, I must take emotion out of the equation and purely focus on the technicals. If there is a good setup, I enter, no questions asked. Here, I had it right technically, but dropped the ball mentally. I'm going to have to work on that.
Please note that I am not saying you should ignore your losses. On the contrary, losses should be scrutinized from every angle. However, if you come to the conclusion that the trade was a good one and that you just ended up on the wrong side of a low risk trade, you must move on and erase the trade from your memory. A trader who is trigger shy is equivalent to a basketball player being afraid to shoot because he missed his last uncontested shot. Once doubt enters into the equation, it's game over.