Here we have a valid BULLISH Pattern on FX:AUDUSD that is close to the completion point. Yes the market is clearly in a downtrend BUT we can expect some correction/pullback before continuing to go lower. According to my rules, since I do not see any setup for shorting this pair, I rather go long for now based on this particular setup and then short again after getting the correction/pullback. For patterns the stop loss is placed 10 to 20 pips below the 200% extension level for XA leg.
I previously posted two ideas for going LONG on this same pair BUT both ideas were invalidated by the market. So you're probably thinking why would you LONG this pair again after 2 straight loses, well my simplest answer would be that I just have to FOLLOW MY RULES. Yes, there will be days when nothing is going right for you but if you believe in your strategy and you know that it has an overall positive outcome, than these 2- 3 losses do not matter. This I believe is the main barrier that many traders face BEFORE going on forward to become a SUCCESSFUL trader. Even if this trade turns out to be a loser, it wouldn't bother me at all.
One of the most important point that you can take from this is that, BACK-TESTING a particular strategy that fits your trading style, will give you a lot of confidence. This will allow you to NOT worry about small loses that are likely to occur along the way but it will also keep your emotions under control. Back-testing gives you the extra edge that you need in the markets over other traders.
NOTE: Since this is a counter-trend trade setup and now that I am aware of the probable chances of this setup being invalidated, I have decided to half my position size from what I normally trade with. I'll make sure to keep everyone up to date on this setup.
Please feel free to AGREE or DISAGREE with this idea by leaving a comment below. Hit that thumbs up button (top left corner of this chart) if you like the idea. Good Luck :)