What's interesting is that the potential formation (red lines) would also line up with an equal measured move from our previous retracement (pink lines)
Does this mean a sell at that level? NO, i'd prefer a move close to previous structure highs at the $1.12 even handle, but it's certainly something that we'll be keeping an eye on as we venture down to the lower timeframes in today's Live Trading Room.
I've recently been asked by FX Trader Magazine to write another article for them and I wanted you guys to pick the topic. If you have an idea please leave a comment under this video and I'll be choosing 3 that you can vote on by Thursday. http://buff.ly/1Xb6OKW
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You should be grateful for any profit the market gives you. Don’t spend any time crying about how you didn’t get the maximum profit, or how you could have gotten so much more profit if you just stayed in the trade longer. If you want to do anything about it, then stay in the damn trader longer next time. I’ll tell you how you can do that.
GETTING MORE THAN 10 PIPS
Let’s say that I find a great opportunity to go for 10 pips on a trade. I submit a market order, to buy the EUR/USD at 1.2900. I set a stop at 1.2880 (20 pips) and I do not set a limit order.
I am now long (because I bought) the EUR/USD at 1.2900.
When the price that I can sell at reaches 1.2910, I have earned 10 pips. I can either exit the trade with my profit, or stay in the trade longer. Here is how I stay in the trade:
I move my stop to break even. If my initial stop was 20 pips (or, on this trade, at 1.2880), then I move my stop to 1.2900. That means that if the price falls back to 1.2900 my trade automatically closes and I have lost nothing. I have gained nothing. I have traded defensively.
But if the trade goes to 1.2920, and 1.2930, and beyond, I am prepared to get more money. I can lose nothing — I am in a 100% risk free trade. Now I can let my profit run and I don’t have to worry about anything.
Many traders ask me why I would do something like that. Why would I accept a break even trade? My answer is a question:
Out of 10 trades, would you accept 5 break even trades, 2 losers of 20 pips, and 2 winners of 50 each? I would. That’s trading defensively, and it’s what I want you to do.
How do you know when to just get out with 10 pips? I say, get out with 10 pips any time you want. It’s ok to just take 10 pips.
How can you make money if your stop loss is at 20 or 30 pips and your gain is only 10 pips? You’re not going to
16 THE CURRENCY TRADER’S HANDBOOK
take 10 pips every time. This is not going to be your only trading strategy. This is one part of your trading toolbox. Other types of trades that you will take will get you more than 10. Lastly, remember that you are going to move your stop to break