Morning Anu - I got up a EUR/CAD chart there and I see your predicament! Yes, after a very nice break-out, EUR/CAD has had a very difficult couple of days.
It is not that dissimilar to my GBP/CHF trade which I posted about above - there has been a retrace and now my floating profit has reduced significantly. It is not pleasant. Three choices -
1. Leave the market to decide your trade's fate - leave stop at break-even and see what happens -
Pro - you are giving the trade every chance to get back on track. The daily chart doesn't look great, but the weekly hasn't gone bad yet and the long wick on the monthly is definitely still valid. Maybe this is just a retrace? 😀
Con - The market could continue to the downside and hits your stop - zero profit. How will saying goodbye to those 200 pips make you feel? 😡?
2. Close out the trade right now for x pips:
Pro - you get a little relief and you manage to be pleased with yourself that you got a little profit into your account. Move onto the next trade.
Con - should that monthly long wick candle play out - you are potentially missing out on hundreds and hundreds of pips.
3. Pick a criteria that you will force you out of the trade if it happens - (for example, if price gets below those lows at 1.4560)
Pro - you might get out with a very small profit. Is that really a pro 😕
Con - Again, nothing to say that price can't rally from here!
Only you can decide your trade's fate Anu. What you need to do is weigh up all of the options and decide on which one you can live with the best - the one that will have the least negative impact on you emotionally, should it occur. Looking at that EUR/CAD chart now, I know exactly what I would do, but there's no point me telling you what that is, you need to manage your trade according to your own trading personality, emotions etc.
But whatever you do, take comfort in this - even if this trade doesn't work out, your chart analysis and trade entry was perfect, well done. If you keep doing that, keeping your losses small, your big weekly winner will come sooner or later.
Watching floating profit fluctuate is one of the hardest things about trading. But you have done your job by getting the stop to break-even. That's your part done. After that, it's largely in the hands of the market. But if you persist, eventually the market recognises your work, and the big winner comes.
Persistence, emotional fortitude and money management!
Doesn't matter whether this one is a winner or not Anu, it's excellent trading by you. Well done, keep it up!
Hi Nigel/Anu
I absolutely agree with everything that Nigel has said in this post but I wanted to add another point that ties into Nigel's post about adding to positions yesterday.
Whilst these large retracements can be very painful to watch when you see a nice 200 pip profit slip away from you back to nearer your entry, rather than feeling pain why not be happy? This might be the market giving you another opportunity to add to your position at great value.
I believe I am relatively aggressive in my trading, I have made the decision that I am not a 50 pip trader, I want a big trade or a break even trade, that is all I am looking for.
Consider this; the market has retraced to within 50 pips of your entry after having been up about 200 pips. When you first opened your trade, did you consider that you were getting in at a good value price? I hope so, if not, you shouldn't have taken the trade. So now you are approaching a price that you once considered to be good value, there was a large drop in price which indicates that the big traders also felt this was good value, do you think they managed to fill all of their orders at that price? I doubt it, so what do they do, they start buying again to drive price up again to an area that they consider fair value and then they come in hard and fast and if you are not quick, you may lose the opportunity to join them again.
So what does this mean for your position? personally, seeing as I don't want a 50 pip profit, could I use some of that profit to add to my position. Yes I can and I can do it without taking on any risk at all. I can look for signs that price is going to turn, move my SL of my original position into a small profit (just enough to cover the initial risk of the additional position). And there I am in a risk free trade that might just work out.............
We are all different, but this is how my trading seems to be going, I am aggressive when there is little or no risk and I am ultra conservative until I get to that point.
We have to think about what the price action is really telling us, because it is telling a story and it is a story that anyone can learn how to read. I am beginning to get a feel for what price action really is, at the beginning, it looked as simple as seeing a pin bar and trading it because I have read that a pin bar is a strong signal for a possible change in direction. There are concepts that you can learn about that will help you read what is happening on a price chart much more accurately. Rather than just knowing what support and resistance, supply and demand, trend lines, candlestick patterns (both individual and collective), volume and order flow are, you need to try and understand why they exist. What is the big money trying to do? These are the guys who actually make the market move and so it makes sense to try and follow in their footsteps.
BY developing an understanding of these concepts, you can put into perspective everything that is happening and make an informed decision on what you want to do.
I want to be clear, none of the above will ever get you to a stage where you can say what the market IS going to do, but it might just get you to a stage where you can more accurately predict what is going to happen.
If you can do that and keep very strict rules about your money management, then you will be on the road to success.
Every day is a day for learning and trading should not be any different.
NIgel - I apologise about the length of this post, I started typing and it just came out, I realise some of these concepts fall outwith the PAST strategy e-book however I strongly believe an understanding of all of the above can only help our PAST analysis.
Stuart
