Many years ago, there was a book called “The Rat Trap” written by a Swedish writer Selma Lagerlof. It’s an interesting story that reads like a fairy tale.
The rat trap seller was a homeless tramp, who stayed the night as a guest in the cottage of a farmer. The lonely farmer entertained his guest like a trusted friend, but the next morning, the peddler came back, smashed the window and stole the farmer’s money.
This story reminds me of a common problem we face as traders.
Why it is that when you take a breakout trade, price always seems to reverse against our positions? We either get stopped out or even worse, lose lots of money.
It’s almost like getting caught in a rat trap.
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