Wednesday, November 25, 2009

Followup on yesterdays post; how well went the trade

One of those things I still need to learn is exit strategy. I pretty much have entry down, now the question is when to bail out and take profits! I usually tend to hold on a little longer to increase my profit margin, but many times it does the opposite and cuts my profits 20% on average. That's not good. In the upcoming days I will do some studies about exit strategies. For now, let me explain what the fuss (trading alert) yesterday was all about. I had a trade in mind, the EUR/USD and a price level for that particular pair. In this trade it was the perfect example that psychological trading does not work. The psychological key level (the resistance) that was pounding the 1.50 key level for quite some time and when it did break, a great pull back occurred of sometimes over a 100 pips, everytime missing the boat, wondering if I should've shortened it at 1.50 (or any price I could get it above that level). I thought this was the case again when it broke above 1.50.

I was wrong!

Once it broke resistance level it sky rocketed (trading now @ 1.5143, over 150 pips higher then my original entry point). Looking back I should've realized that this time the key level was a portal for direction, mainly since alot of positive news is coming from Wall Street. Risk appetite is abroad which only makes the USD weaker.

I didn't lose much! I was smart enough to put a stop loss @ 1.5020, mainly due to I was kind of hesitant about the trade because of what I wrote in the previous paragraph. Luckily also it wasn't a large trade either.

I did put several Twitter alerts out there and for awhile there I did have $300 profit.

Oh well, you gain some, you lose some. That's how trading works.

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