What is a ‘Trading Rut’ and are there any rules for entry and exiting the trade in question?
A Trading Rut is commonly experienced by all traders at one or the other point, so it’s quite important to know a few important things about the same. When you experience major and frequent losses in your trade and profits are nowhere to be seen, you’re said to be stuck in a trading rut.
The rut may occur because of a number of factors like changing the trading plan or not sticking to the strategy, etc. Though prevalent, trading losses should not demotivate traders, new or pro, but the traders should ask relevant and creative questions to deal with the situation and look out for the possible causes that led to the loss streak.
As per regarding the rules to enter and exit the trade in question, they are self-decided according to the situation. In fact, the lack of a clear and detailed plan could be the reason for the occurrence of incessant losses.
So, the question to be asked is not whether there are any entry and exit rules but rather, “do I have a plan for the same and if yes, how detailed and specific is it?”! The details should include everything, the when and how, the trading situation/circumstances, under which one needs to take the action.
One small yet important thing to be taken care of is if you made any changes (to any extent) to your trading plan. You might plan to enter the trade on the occurrence of a specific trading signal or exit under some other. Also, it’s better if the rules are tested and based on grounded and solid assumptions.