I am going to show you a trade recently I took and
will try to explain what I am doing before the trade and how I am
managing while holding the position so that anyone who has a similar
trading style can benefit.
My SR line is at 1.8600 and I have been watching this pair since April 2nd, 2009 when daily close was at 1.8792.
Lesson #1 - You should have your SR lines ready on your chart, and most importantly they should be at correct places.
Since Oct. 2008 the price was moving first in a wide range and then forming a triangle, until traingle was broken down. Although one can trade triangle pattern, the safest move was to wait the price to go 2.08 or 1.86 levels, where we have the range boundaries.
Lesson #2 - As it has been said over and over again almost on every page in this thread, patience is very important and you should wait until price gets close to your pre-determined levels. Because you know your trading levels days-weeks before taking a trade.
Between Apr. 2-9, I didn't see any PA confirming long trade, so everyday, it took only a few seconds to check daily close and move on to other pairs.
Lesson #3 - That's why this trading style allows you to do other things in life and it is stress free.
April 9th was an important day for this pair as we saw a decisive break of a major SR level. From now on, I looked for a test of 1.8600 level again to see a PA to confirm the break was real and then, of course, to open a short position.
Lesson #4 - There shouldn't be any hesitation in your trading plan, it should be clear and should answer all " if " questions (like if support holds, look for long trades, if PA confirms take long, if take long, SL should be known... etc.)
We saw a test of 1.86 level on April 20th, but PA didn't confirm the short trade. If you go down to H4 time frame, you can see some confirming PA, but this is where Strat's teaching comes to play, especially for volatile pairs like this.
Lesson #5 - Daily bar includes 6 times more info than a single H4 bar, yes, sometimes it is costly but most of the time it's safer. Remember our first goal is not to lose.
On April 28th, we saw another test of 1.8600. And next day, the daily close was a bearish engulfing bar. After the second test of 1.8600 level and confirming PA, the break was real and I have opened the short trade with confidence.
Lesson #6 - Even if the trade goes against you, do your homework properly, only that matters.
Stoploss was above 1.86.
Lesson #7 - It does not matter how many pips your SL is away. Percentage loss and determining your trade size accordingly matter.
Re. take profit levels, I could use 1.80 and 1.77 levels (btw, I know these levels before taking the trade, so not changing my trading plan at all) with partial exit strategy, but generally I prefer to wait and see PA around TP levels. So after seeing 4/30 and 5/4 bar closes and PA, it was proved that 1.80 psycho. level was an important support level and I have decided to exit half of the position with a limit buy order at 1.80 and keep watching PA at that level.
Lesson #8 - The exit strategy is very important. You can either use a fixed TP level strategy or keep watching PA around TP levels like I did.
5/5 daily close was below 1.80 level with a good bearish bar, but I still didn't move my stoploss for the remaining position I have.
Lesson #9 - You should leave enough room for the trade to develop. Patience while holding a position is important as much as patience before opening the trade.
Yesterday low was 1.7742, close to 1.7700 SR level, so I have moved my stop above 1.80 level and again decided to hold the position to see PA around 1.77.
Lesson #10 - For this kind of trading style, trailing your stoploss is important but your new SL level should have a meaning and again leave enough room, this time to catch a possible long trend.
Today, although daily bar hasn't closed yet, price is approx. 100 pips below 1.77. If it closes like this, I'll move my stop above 1.77. But if I see a close above 1.77, it is highly probable that PA will be bullish around an important SR level and I will exit my short position.
Last Lesson - As you can see above, every stage of the trade has been planned before opening the position which take emotions out of the equation. Although PASR is a discretionary trading method, you can still trade it mechanically and exclude human factor as much as possible.
Sorry for this lenghty post but I hope it helps you improve your trading as it includes "bits and pices" re. planning a trade, executing, managing, and even money management aspect.
My SR line is at 1.8600 and I have been watching this pair since April 2nd, 2009 when daily close was at 1.8792.
Lesson #1 - You should have your SR lines ready on your chart, and most importantly they should be at correct places.
Since Oct. 2008 the price was moving first in a wide range and then forming a triangle, until traingle was broken down. Although one can trade triangle pattern, the safest move was to wait the price to go 2.08 or 1.86 levels, where we have the range boundaries.
Lesson #2 - As it has been said over and over again almost on every page in this thread, patience is very important and you should wait until price gets close to your pre-determined levels. Because you know your trading levels days-weeks before taking a trade.
Between Apr. 2-9, I didn't see any PA confirming long trade, so everyday, it took only a few seconds to check daily close and move on to other pairs.
Lesson #3 - That's why this trading style allows you to do other things in life and it is stress free.
April 9th was an important day for this pair as we saw a decisive break of a major SR level. From now on, I looked for a test of 1.8600 level again to see a PA to confirm the break was real and then, of course, to open a short position.
Lesson #4 - There shouldn't be any hesitation in your trading plan, it should be clear and should answer all " if " questions (like if support holds, look for long trades, if PA confirms take long, if take long, SL should be known... etc.)
We saw a test of 1.86 level on April 20th, but PA didn't confirm the short trade. If you go down to H4 time frame, you can see some confirming PA, but this is where Strat's teaching comes to play, especially for volatile pairs like this.
Lesson #5 - Daily bar includes 6 times more info than a single H4 bar, yes, sometimes it is costly but most of the time it's safer. Remember our first goal is not to lose.
On April 28th, we saw another test of 1.8600. And next day, the daily close was a bearish engulfing bar. After the second test of 1.8600 level and confirming PA, the break was real and I have opened the short trade with confidence.
Lesson #6 - Even if the trade goes against you, do your homework properly, only that matters.
Stoploss was above 1.86.
Lesson #7 - It does not matter how many pips your SL is away. Percentage loss and determining your trade size accordingly matter.
Re. take profit levels, I could use 1.80 and 1.77 levels (btw, I know these levels before taking the trade, so not changing my trading plan at all) with partial exit strategy, but generally I prefer to wait and see PA around TP levels. So after seeing 4/30 and 5/4 bar closes and PA, it was proved that 1.80 psycho. level was an important support level and I have decided to exit half of the position with a limit buy order at 1.80 and keep watching PA at that level.
Lesson #8 - The exit strategy is very important. You can either use a fixed TP level strategy or keep watching PA around TP levels like I did.
5/5 daily close was below 1.80 level with a good bearish bar, but I still didn't move my stoploss for the remaining position I have.
Lesson #9 - You should leave enough room for the trade to develop. Patience while holding a position is important as much as patience before opening the trade.
Yesterday low was 1.7742, close to 1.7700 SR level, so I have moved my stop above 1.80 level and again decided to hold the position to see PA around 1.77.
Lesson #10 - For this kind of trading style, trailing your stoploss is important but your new SL level should have a meaning and again leave enough room, this time to catch a possible long trend.
Today, although daily bar hasn't closed yet, price is approx. 100 pips below 1.77. If it closes like this, I'll move my stop above 1.77. But if I see a close above 1.77, it is highly probable that PA will be bullish around an important SR level and I will exit my short position.
Last Lesson - As you can see above, every stage of the trade has been planned before opening the position which take emotions out of the equation. Although PASR is a discretionary trading method, you can still trade it mechanically and exclude human factor as much as possible.
Sorry for this lenghty post but I hope it helps you improve your trading as it includes "bits and pices" re. planning a trade, executing, managing, and even money management aspect.
Source: Here
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