EURUSD SHORT

Daily Chart

Overall Market Sentiment: Downtrending market. The volatility and rate/momentum of the downtrend seems to be slowing down. Hence be wary of a possibility of a transitional/consolidating phase where price just won't go further short.

This is just something to keep in mind. For now though, I want to go with the grain and momentum of the downtrending market. I also would like to take trades with the trend in order to increase the probability of a winning trade and also of greater profits potential.

Keeping all of this in mind though, it is a good idea to take partial to full profits around the horizontal support line, which we can perceive as a target. You can continue riding the trend down with the other half of the active trade once partial profits have been taken. All based on your preference. Taking full profits is a safe option in this situation. The decision is yours, base it as close to your own trading plan as possible.

Current positional view:
Price broke up but it appears that price has been rejected from continuing up and has now gone back with the trend and grain.

RISK and Psychology.
MOST IMPORTANT ASPECT. Stick within your own risk management rules. As trades, we MUST have strict risk management rules that we follow. This is not gambling. We must be strategic and plan our trades with discipline and rules.
We need to have a positive, net profitable outcome over a series of trades, not just 1 trade.

This is a game of probabilities, nothing is guaranteed. Hence, we must protect ourselves as best as we can so that we stay IN THE GAME for the long term. And it is in the LONG TERM that we will:

1) Be able to survive.
2) Be in a net positive, profitable position due to our ability to survive and be in the game long enough to capitalize and take advantage of multiple BIG wins.
3) Be in the game long enough to build our experiences and move the needle forward in our own personal trading journeys.

Imagine this.... we place 100 trades and hypothetically, we have risked a total of 1% (IN TOTAL) over the course of 100 trades. If we won half of them, what do we have to gain? Hypotehtically lets say we won 1% over the course of 50 wins.
We may be up 50%.

However lets say over the course of those 100 trades, our risk PER trade is 10%?
50 losses x 10% per loss = 500% of losses. We have blown our account 5 times over just by that risk alone. I know that there are wins too but if we lose 5 times in a row, we have lost 50% of our trading capital.
What happens next? You want to win it back? Do you continue with the same amount of risk per trade? Let's say you lose the next 1-2 aswell. How will that affect you psychologically? Sub-consciously? Think about these things.
Now compare it to the first example i wrote about.

1-2% max per trade is a good and manageable amount. The mathematics behind it allows you to withstand enough losses to come across the big wins that you need.

This all depends on your strategy, the amount of trading capital you have, your risk tolerance and how you can handle it psychologically.

Stop losses: Blue horizontal lines.

The stop loss line that is further away obviously has a higher probability of this trade winning as your change of getting stopped out is less.

You must keep in mind that your risk must be adjusted for this distance which is approx 120 pips away, as of the time of writing. Please ensure that your total dollar loss equates to 1-2% of risk.

The other stop loss is approx 40 pips away as of time of writing. Keep in mind, your probability of getting stopped out is higher.

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