Profile of trades - the consequence of not understanding them.

Trades can be grouped according to the following profile:

• With the trend
• Counter trend
• Trend reversal

Each type of trade carries a different risk-reward proposition. In my opinion, inexperienced traders make the mistake of not evaluating the action they are going to take according to these trade profiles and therefore cannot correctly establish entry, exit and failure points.

For example, a trader who executes a counter trend trade without making the necessary mental preparation and planning required for trades of this kind may end up overstaying. After a short retracement, price reaches a support and resumes the trend. Gains quickly evaporate and the position turns into a loss.