Knowing When You’re Wrong (Simple Trade Invalidation) One of the most overlooked skills in trading is knowing when a trade is no longer valid. Not just when to stop out but when the core idea behind the trade has broken down. There are a few ways to think about invalidation: 1. Price-Based Invalidation You enter with a thesis and there’s a price level that, if reached, clearly proves that thesis wrong. It could be a break of structure, loss of key support, or failure to hold after a catalyst. Whatever the case, there’s a line where you say: "If it hits here, I’m out. The trade didn’t work." The mistake is treating stops as optional. A proper price-based invalidation is part of the setup not something you react to emotionally. --- 2. Time-Based Invalidation Not every failed trade ends in a sharp move against you. Sometimes, it’s the lack of movement that tells you something’s off. If you expected momentum or fast follow-through and the trade just goes flat, that’s a form of failure too. It suggests the bid you anticipated isn’t there. Time-based invalidation protects you from passively sitting in dead trades while better opportunities pass you by. If the trade was meant to move quickly, and it didn’t that’s enough of a reason to reassess. --- 3. Context-Based Invalidation This one’s more subtle but often more important. Sometimes price hasn’t moved much, and you’re still technically “in range,” but the environment has changed. Maybe majors reversed sharply. Maybe the narrative faded. Maybe the catalyst dropped and no one cared. Maybe a macro piece of news changed the market risk tolerance. In these cases, the trade may not be invalid by chart structure, but it is by context. The reason you entered is no longer present. This kind of flexibility is what separates those who trade the idea from those who get stuck in the position. --- Getting stopped doesn’t always mean you were wrong. But staying in a trade that’s no longer valid usually does.