THE WRATH OF THE BRITISH KAMIKAZE
In posting this Forex blog I must say that I am practicing what I preach so to speak and letting go of a trade on this currency pair that I missed. Also reiterating the reason we are here at Forexmospherians is to help eachother and improve ourselves by sharing ideas and trades, the good ones or bad ones. So here is a recent trade showing my approach and outcome of how I eventually left it. I feel certain its a regular set of circumstances which can be shared as a trading tip and will explain the conditions and the lessons to be learned.
Firstly, I consider this trade a good H1 setup and a good execution but a bad stop placement.
After the initial push of the GBPJPY, I generated an outstanding signal, it was one of my best signals, so I exercised patience and waited on the pullback test of the break and re-entered a short trade.
I placed my stop above the high of the test and called it a night only to wake up this morning to find out that my trade had been stopped out on a retest. Needless to say, my initial feeling was disbelief and I went straight to the price analysing the structure to see if there is another chance to get back in on the move. This is where a lot of traders, including myself, at one time and more, chase the move to get back in.
So with that in mind, here is a list of things I do to keep from chasing a move.
1). First I step away from price and go evaluate my entry and stop, this disconnects me from the urge to get back in.
2). Remind myself this is only one day in the markets and my planned trade is over.
3). Look at the big picture and realize the market is huge and there are going to many more opportunities that I can plan in advance for.
4). Go to the broad market outlook and further disconnect from the loss.
5). Only after I have effectively disconnected from the loss then will I look for and frame up a re-entry trade.
As a summary, its important that FX traders see entries and the set up in advance, stick to trading the plan and not jump back in because we missed the boat. If the market pulls away from our grip and gives us no defined planned re-entry, then try to remember;" The Foreign Exchange market is huge and there are going to be many more planned opportunities on other occasions so do not chase"