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Why You Keep Losing Trades

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Definition Rob’s diagnosis of every losing streak, unchanged for years: “Losing trades are chopped up in a one, fighting a two, getting destroyed by a three, fighting continuity. Winning trades: two in your favor, three in your favor, continuity in your favor. PERIOD. If you go through anything you’ve ever done, you’ll see I’m right.”

The four losing shapes

Go look at your own trades. “If you’re doing something that’s not working, don’t do it. There’s a reason… You had to have some continuity to win. HAD TO.” Every losing trade is one of these four shapes.

The four losing shapes: whipsawed inside an inside bar under an untouched motherbar, shorting into a green 2u that keeps going, buying the break of a high on a bar that completes a 3d, and shorting while the monthly, weekly and daily are all green the level the trade is fighting X 1 buy ✕ short ✕ chopped up in a 1 X short 2u 2u ✕ fighting a 2 X buy 3d ✕ destroyed in a 3 M W D short ✕ continuity is up fighting continuity “Losers look like this.” TheStrat.AI
The four shapes of every losing trade: whipsawed inside a 1 while the motherbar’s high and low stay untouched, shorting into a 2u that keeps going, buying a break on the bar that becomes a 3d, and shorting against three green timeframes. Each shape is animated in full at Winning & Losing Trades, and each one mirrors: the same picture with long and short reversed.

All four losing shapes and the three winning ones are animated in full at Winning & Losing Trades.

The death spiral

The cycle, in Rob’s words: “You’re building the triangle with yourself. ‘Look at that neat little triangle. Yeah, I built it with my own cash.’… You get stopped out. ‘It’s too tight, gotta loosen my stop.’ You get stopped out in almost the same amount of time. ‘I’m not using a stop, man, that’s just stupid.’ And then you get really destroyed.” It ends the same way every time: “you go get another job, or you come see me, or you keep funding the account.” Every loosened stop was cash spent drawing a wider broadening formation on your own chart.

The stop-loosening death spiral: a long is stopped out on a tight stop, re-entered with a looser stop and stopped out again, then re-entered with no stop at all and destroyed — each swing wider than the last, building a broadening formation the triangle you build with your own cash your stop — looser every time tight stop X 3d ✕ looser stop 3u 3d ✕ no stop 3d ✕ you go long — tight stop under the bar tight stop — out “It’s too tight, gotta loosen my stop.” looser stop — out in almost the same amount of time “I’m not using a stop, man, that’s just stupid.” And then you get really destroyed. TheStrat.AI
Three entries (tight stop, looser stop, then no stop) inside one broadening formation the trader paid to build: the tight stop goes first, the looser one goes in about the same amount of time, and the trade with no stop is the one that does the damage. The short-side version is the mirror image.

Usually one aspect is missing

The live diagnosis Rob gave struggling traders was almost always the same: “Usually when people are struggling they’re missing like one aspect: they’re ignoring continuity, they’re ignoring where this is in the broadening formation series, their magnitude.”

  • Ignoring continuity: check full timeframe continuity before every entry. “If you’re in conflict at any time, you’re screwed” (see conflict).
  • Ignoring the broadening-formation series: “If you’ve ever seen something that’s gone up all day and you bought it three times and lost: that’s because you’re walking into the triangles, trying to buy the breakout into new highs.” Know where price is in the series first.
  • Ignoring magnitude: taking a signal without checking how far it can still travel: magnitude is half of every actionable signal.
  • Fading: “Don’t fade. Kills. When you fade, more often than not all you’re doing is trying to profit from other people’s profit-taking.”
  • Fighting the sector: “The whole sector’s up and your stock is down, and you think that thing’s going to turn around? You’re out of your mind.” See natural buyers & sellers.

Where you gave it all back

The answer is scenario three: “That’s how people get killed: being on the wrong side of scenario three. Anybody who’s traded for a long time and made some money and given it all back. If you go back in time and see where you gave it all back, it was scenario three.” A 3 takes out both sides of the previous bar, so whichever side you are on can be run over inside one bar: check exhaustion risk, the time left in the signal’s bar, before you sit in one. In series it compounds: “A 3-3 is how you’re really going to get killed. The 3-3 will murder you.”

Frequently asked

Why do I keep losing trades no matter what stop I use?

Because it is never the stop. It is trade selection. A viewer emailed in after a losing week with 10-cent, 50-cent and $1 stops alike; Rob’s read was “Sounds like you’re getting triangled out,” and every fix he gave was selection: exhaustion risk, conflict with the week, and jumping into movers instead of waiting for a simultaneous break. Not one fix was a different stop.

Related: Winning & Losing Trades · Full Timeframe Continuity · Truth #3: Broadening Formations · Exhaustion Risk
Next: Why You Keep Getting Stopped Out →

TheStrat was developed by Rob Smith. These docs are written by Alex Sopa (AlexsOptions) and quote his teaching. Work in progress: spotted an error? Tell Alex.

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