Question:
Hi,
Thanks for getting back to me.
So this week was another frustrating one for me instead of being a pretty good one potentially.
Breakeven again! lol
I have included a couple of screenshots with annotations and I would be really grateful if you could take a look.
I traded a continuation pin on NZDUSD and got stuck in it and miss out on trading the news. I found the book you suggested ‘beat the forex dealer’ by A Silvani to be an awesome read! Thanks
You mention that your trading has evolved over the last few years, may I ask how?
I myself have started to trade news events looking to ‘gun for stops’ ect or rather just fading the ranges set after releases but it all happens so fast sometimes the price action just never forms but I have noticed this particular sort of engulf type setup which is quite hard to explain I will attach a screenshot.
Anyway, in terms of questions my main queries are in regards to trade management and take profits. After reading your books I know to look for a change in structure but it’s the timeframe that I need to be looking for this change in structure I struggle with.
If for instance, I am trading what becomes a new daily up/down swing then should I be holding the trade until i see a chnae of structure (ie. take profits) on the daily timeframe?
Let’s assume that I traded a 1hour pattern or found an entry of some sort.
Also what do you think I should have done with the NZDUSD trade?
I know now of course that I should have closed it but what is your view on opening up another position on a coprrelated pair if you currently have no ‘risk’? ie moved stop to breakeven.
I still have it programmed in head that you shouldn’t trade correlated pairs as your just effectively hedging or doubling down etc but I know I also need to think dynamically and adapt to changing market conditions.
For example, I traded another continuation pin a while back and towards the top of the swing down (I was trading an uptrend) a reversal pin formed and I heard a voice in the back of my mind say ‘if you think the market direction is changing then quickly, reverse your position!’ this of course I found rather hard to do!
I know that it’s my fear of uncertainty is holding me back, don’t get me wrong i’ve taken some pretty bad trades that I look back on and think Ergh!
But i’ve also taken some really good trades that turned out to be momentum moves that had I not taken profits early would have alone made me some decent money by now. Looking back I am actually both horrified and impressed by my ability to go round in circles.
I guess what I am missing is exactly what defines a good trader.
The lack of fear.
Unitl the point that I enter the trade i’m usually objective, I never chase price ect but then I turn into the very fearful creature I seek to profit from the minute a profitable position turns against me!
I am getting better but damn it’s hard, I just don’t ‘know’ what the correct decision is. I just want to make the ‘right call’ regardless of win or loss.
I suppose this is know as ‘fear of being wrong’?
Also, you mentioned about price breaking above/below a high/low by x pips and confirming the market direction. Will there be an article explaining how to do it in the even of a change in volitility? Because I’ve notice some pairs change and i’ve then been unsure about the distance ect , also on cross pairs for instance.
I’ll leave it there as I’m sure your already getting fed up of how many questions I have.
Thanks
Response:
Hi Rich,
Don’t sweat it – breaking even beats a loss, right?
Besides, who knows? This week might just surprise you.
The key is to stay sharp and focused.
Now, onto your questions.
Q1. You had a bit of tough luck with this pin.
The pin itself was fine, but its timing – just before the NFP which stirs up volatility – made it a toss-up. I think moving the stop to breakeven was the slip-up. I understand why you did it – the price dropped – but with the NFP on the horizon, a price rise or spike was highly likely.
Personally, I would’ve either locked in profits after the drop or left the stop just above the high for a better chance of staying in if the NFP caused a big shift.
Q2. I’ve attached an image to better explain my thoughts about this zone.
In essence, this zone was still valid despite the price break and its age exceeding 24 hours, due to its proximity to the consolidation from which the price had dropped.
The consolidation suggested that banks could be placing sell trades in anticipation of a big drop.
The subsequent price fall lent credence to this theory.
The mini-consolidation (where the supply zone formed) could have been a result of more sell trades or a buy to reverse the price. However, when the price dropped again, it made it very likely that sell trades were placed, and given its close highs to the main consolidation’s highs, it’s considered part of the same structure.
That’s why the supply zone was still valid.
Q3. I can’t say definitively if I would have made that exact move, but in hindsight, I might have taken a shot.
This pin was good because it formed a strong reaction to a stop run – it formed after the wick dipped below recent lows. Most stop run pins are weak with small wicks, bodies, and overall size, indicating a low success probability.
But this one is significantly larger, indicating a strong reaction to the stop run and a decent chance of a reversal or at least a rise.
Q4. Your question is a bit unclear.
Are you asking if you should have traded the USD/JPY stop run because the order book confirmed stops were there instead of trading the NZD/USD stop run where you didn’t have confirmation?
Please clarify, and I’ll be happy to answer.
My trading has evolved quite a bit.
I won’t delve into every detail here, but I focus a lot on significant round number prices (ending in 000, 500, 0000) and watch for major reversals. I use supply and demand zones within these figures for trades. It’s more nuanced, naturally, but that’s a significant aspect of my current strategy.
It’s closely tied with my understanding of banking operations, particularly how they place trades and take profits.
My member’s posts and analyses should provide more insight.
Regarding profit-taking, yes, primarily stick to the 1-hour timeframe, but keep the daily trend in sight.
If you’re trading a consolidation with several swings, aim to take profits when the swing hits the consolidation lows. Don’t rush to take profits if the price makes a higher high or lower low on the 1 hour; wait for it to reach the other side.
To cash in on the 1 hour, wait until the price fails to break through the recent supply or demand zone. But if a massive decline follows the formation of a supply zone, adjust your stop with the drop.
As for trading correlated pairs, it’s an intriguing idea.
The key would be to determine how strongly the two pairs correlate.
If one pair isn’t closely correlated with the other, you run the risk of a price movement wiping out your stop. It’s worth experimenting with, and I might even give it a try myself.
Lastly, I don’t intend to write an article on that old method. I find it too subjective. I still consider whether a small distance from the previous low could indicate banks buying, but I don’t use exact pips to determine the closeness anymore.
Seems like you’re entangling yourself in the quest for the ‘perfect’ decision.
Just remember, in trading, there’s rarely a pure right or wrong choice. We’re working with incomplete information and a complex, unpredictable market.
Our decisions hinge on the info and understanding we possess at the decision-making moment.
For example: you’re sitting pretty in a profitable trade.
Suddenly, price hits a supply zone and starts falling. Assuming you were long, you exit the trade, anticipating a further drop.
But surprise!
Price flips and skyrockets.
So, was your exit a bad call? Nah!
At that moment, there was no crystal ball revealing the imminent upswing. Hence, no regrets.
Here’s a tip: Consider diving into long-term trades.
Simultaneously, continue with your 1-hour chart trades (or any other timeframe you prefer). If you have a long-term trade churning profit, the outcomes of your short-term trades will stress you out less. This relaxed mindset can sharpen your decision-making and reduce the obsession with always being right.
I get it, consistently profitable long-term trades are easier said than done, but giving it a shot won’t hurt.
