Profile image
By Blog For Trading Success (Reporter)
Contributor profile | More stories
Story Views
Now:
Last Hour:
Last 24 Hours:
Total:

Fear and Trading

% of readers think this story is Fact. Add your two cents.

I was teaching a small class on “soft stops”. By that I mean:

  • Anticipating, before entry what I expect the market to do, and
  • If the expected does not happen,
  • Whether or not exit.

We were looking to take a trade in the EURUSD. The key question I asked myself when taking a trade is whether I’m entering a rotational market or a directional one.

With a rotational market, we are looking to sell highs and buy lows. The soft stop is determined at the end of the day. With a directional market, we are looking to sell new lows and buy new highs. The soft stops are based on intraday activity. (For me, usually the 60-minute chart).

EURUSD, 15-min, Chart through the courtesy of MarketAnalyst

The chart above shows the entry for the class.

The high for the day at that stage was at the 50% level of March 7’s range. The ATR for the EURUSD is about 80 pips. When the pair attained the day’s high, it had done 34 pips. So, I was looking for more downside.

We waited for a retracement and went short at 1.12405.

The idea behind the trade was the market was going to form a new leg down.

EURUSD, 15-min, Chart through the courtesy of MT4

As you see from the chart above, we managed to sell the low of the move.

After entry, the market retraced. When the pair had the strong rejection buying and selling extreme, it indicated we were likely to see a rotational day. Because we entered on a directional assumption, the trading plan called for an exit of the position. We could always look to sell around the high of the day, thus improving the entry.

What is interesting is that over 1/3 of the class decided to remain in the trade; some are still in the trade. The next two chart show what happened after the exit.

EURUSD, 60-min, Chart through the courtesy of MarketAnalyst

The chart above shows that after exit, the pair dipped and then rallied. So, the assessment of a rotational day proved correct.

EURUSD, Daily, Chart through the courtesy of MarketAnalyst

In the chart above, we see that the pair formed a” neutral day, within a bearish context”:

  • The body of the candlestick is roughly in the middle – no buying or selling conviction
  • The close below the open, some buying conviction.
  • Today’s daily bar did not provide a trigger bar. Also…..
  • The day’s range is below average.
  • Also, given that it follows Friday’s bullish bar, and
  • Given that today we stopped at the 50% retracement of Thursday’s bar,
  • The next move is probably down.

Taking all of the above into consideration, I’d exit any trades taken today and re-assess the situation tomorrow.

The chart below shows the candlesticks that form my trigger bars:

More tomorrow.

The post Fear and Trading appeared first on Ray Barros’ Blog for Trading Success.



Source: http://www.tradingsuccess.com/blog/fear-and-trading-6705.html
Check out the life changing BeforeitsNews natural health products!  Join our affiliate program to earn with them too!

APeX - Far superior to colloidal silver in destroying viruses, bacteria and other pathogens.  See the videos and 50 page report!

Ultimate Curcumin - Most powerful natural pain relief you can buy.  Reduce inflammation, depression, arthritis and so much more!

Supreme Fulvic - Nature's most important supplement!  Read our amazing testimonials and experience vivid dreams again!

MitoCopper - First bioavailable copper cleans up your blood from pathogens and gives you more energy!  Watch all videos on our website!

Prodovite - The Secret To Healing is in the Blood!  Our nutrition is absorbed in 5 minutes!  See the proof!
Report abuse
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite
Prodovite

Comments

Your Comments
Question Razz Sad Evil Exclaim Smile Redface Biggrin Surprised Eek Confused Cool LOL Mad Twisted Rolleyes Wink Idea Arrow Neutral Cry Mr. Green

SignUp

Login

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.