Holding your breath too long under the water is one of the thing that any trader should avoid. I am holding to this principle too but sometimes, as human, we do have the tendency to make the same mistake too.
Last week's Thursday at around 9am local time here, I entered short on EU pairs and keep it affloat with 200 Profit Limit and 200 Stop Loss or 1.4639 as TP and 1.5039 as SL.
During Friday's NFP released, I was out and didn't watch the market's action until later that night. Very unfortunate though as the market did turn to my favor briefly at 1.4812 but then went up all the way until market closed slightly above my entry at 1.4847. I didn't close the position because I was too busy & tired preparing for the Project Team's Team Building activity that was held on that Saturday morning.
When Monday morning came in which at the same time I was hit by serious flu fever, the EU price opened at 1.4877, went down briefly till 1.4852 and later all the way up till 1.5021. At this point of writing, the price is playing around the 1.5000 level, 39 pips below my SL.
You see, this is the kind of dilemma that I personally believe most traders would face. The test on your discipline and patience. If yesterday's price had hit my SL, then it would be end of the story.
But now, though the momentum is convincingly still on the upside, no one can really tell whether today's price will break yesterday's high or not. Though gold has made a new high yesterday that contributes towards dollar's meltdown, it doesn't guarantee that it could go higher for today.
So what now? Since the dollar is definitely under pressure and I am very clear that this is already a wrong trade to stay in, I'd rather come up with a realistic exit strategy.
This is what I am going to do...
1. I must accept the fact that this is already considered a lost battle, with over 170 pips in the losing territory in which I do not plan to hedge this position or else I could be stucked even longer if the price go even higher.
2. Yearly high so far is at 1.5060 (26th Oct) and hence I will move my SL 50 pips more to 1.5089, around 29 pips higher than this yearly high.
3. I leave it to the market to decide the faith of this position. Technically speaking, there is a chance for correction but no one can really tell until it happens.
4. To hold this position even higher than 1.5089 would definitely be a big NO-NO as you just don't know where and when the new highs will stop, could be at 1.55, 1.60 or even higher than that.
5. If I were to close it now, it would be pathetic to see if say it hits either that 1.5039 or 1.5060 price level and later make a serious correction to my original profit target.
6. Why 1.5089? Well, as you can see the yearly high is so far at 1.5060. Chances are that level could be a very strong resistance where most bidders would wait to enter. If it is not, then surely the price will break beyond 1.51 and so on... So i can consider that level as my last defense, around 29 meters from the last defensive wall...
7. What if it hits 1.5089 and come back? Ahaha... What to do... Eat the bullet and come back... That's all I can say. See, this is where no one can really tell. You got to calculate your risk and be emotionally detached with your decision. Otherwise, you would have gone all the way until you get that margin call. Sorry I'm not goiing to risk my whole batallion for this one bad trade... no way...
In fact, looking back at what happened yesterday, I could have close this position and ride it long instead. But how was I supposed to know? I bet on short and I must say it was a wrong decision, price and time to enter.
One thing for sure is anything can happen in this market and we have to be realistic with our target. My forecast for now, of course considering my position which somehow has emotional attachment... haha... is for the price to hit the 1.5060 level (max) in order to create a double top formation before it can come down all the way to the 50% Fibonacci Level at 1.4480 (taking lows on 8th July @ 1.3832 and high at 1.5060), though my profit target would still maintain at 1.4639.
We'll see what happen today or in the next few days... Like it or not, I do have to put some hope this time, though I hate to hope...
Till then... Have a good trading week... though doesn't look like a good week to me now...
;)
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