(BLOG) One of the Toughest Trades to Take

FX:EURAUD   Euro / Australian Dollar
Despite going 0 for 2 (with 1 breakeven) in my swing trading today, I was able to nail both of the trades taken during Tuesday’s Live Trading Room session. It also just so happened that both of the trades taken were on the same pair and occurred right after each other. This doesn’t happen on a regular basis, but often enough for me to understand exactly how to handle the situation when it does. Here’s the trick…Just follow the plan and do what you’re supposed to do. Unfortunately to many traders this is easier said than done.

I believe that taking back-to-back patterns is one of the hardest feats to overcome in trading. Let’s think about this for a minute. You’ve just taken a bullish gartley pattern, dealt with a little bit of pain as the market churned for a while only come out the other side with profit. Typically at this moment a trader would like to sit back, relax, let out a sigh of relief and maybe tap themselves on the back for following there plan and reaping the benefits. Let’s admit it, we trade in the toughest market out there and winning is a very difficult thing to do. However, instead of getting time to celebrate and refocus another opportunity appears going the exact opposite direction of your initial trade and the first thing that comes to mind is what? “______”

“No way is the market going to reverse again already. I should just skip this trade so I don’t give back any profit.” Obviously, sometimes this will work in your favor but remember our job as pattern traders isn’t to guess which will be successful and which will not, our job is to execute every valid pattern that we see even if it’s very difficult to do mentally. However if you can pull it off it’s a great reminder of why we have rules and how the markets reward those who follow them

This particular trade yielded close to 200pips total to a trader using 2 positions on multiple targets. Yup almost 200pips total on a 15 minute chart. I tell the clients I work with all of the time, “if you’re going to be a day trader stick to watching 4 pairs. Maybe 6 max.” Many think that it’s impossible to be profitable without a massive portfolio. Hopefully scenarios like this will provide a great example of how it’s not about the quantity of pairs you watch it’s the quality of how you can trade the ones that you do that matter most.

Akil Stokes
Chief Currency Analyst at http://www.TradeEmpowered.com
Akil@Tradeempowered.com /@AkilStokesRTM /
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hey Akil, i have a boring question..
in your chart, the bearish chyper pattern didn't touch the entry point. How can u tell that the pattern is still valid or not?
+1 Reply
Akil_Stokes yoseph.ronald
Good question, I make a habit of "frontrunning" my orders (no the illegal frontrunning) but my putting my entry a few pips ahead of the projected completion when ti comes to both entries and targets. Here's a post i wrote about it "Trouble Getting Filled?" http://tradeempowered.com/ask-the-trader-trouble-getting-filled/
Agreed! Pretty tough to get your head wrapped around the fact that the market is going to stop and reverse. But I just follow the rules. I think of it like this. If I see a pattern and it's going against what I'm thinking the market should be doing, I either a) stay out of any trade and stand aside or b) go with it. I NEVER go against it because then the odds are against me winning the trade! Trade what you see, right? But I love it when it happens AND I recognize it in time to reap the rewards! IMHO, advanced patterns work great when the market is in consolidation and going sideways (as in your example). What was that ratio of consolidation vs trending? Something like 80/20? Look at this chart! It's a real beauty...if you realized the market was just going sideways....

I also agree whole-heartedly about limiting your portfolio. 90% of the time I spend trading is only watching the major crosses. Only occasionally will I place any trade on the minor crosses. I keep an eye out on them but don't actively trade them for the very reason you stated. Plenty of trades available just with the majors! I think a lot of people just have it in their head that they don't want to miss out on a potentially good trade in another market. It's the "grass is greener" effect. Besides, I only have 2 20" monitors in front of me! Not enough room to watch so many pairs! ;-P

Great job as always, Akil! Love to read your stuff!
+1 Reply
dionvuletich EverythingForex
Dude, where's my chart...?! =D
EverythingForex dionvuletich
Your chart was so beautiful...I have it as my wallpaper! LOL! I'll pass it along to anybody who wants to see how to make bank using patterns! Hope you don't mind.
Akil_Stokes EverythingForex
Even deciding to stay out is going to have an effect on the expectancy of the system
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