Thursday, June 01, 2006
Learn online forex trading - A Perfect Mistake
Learn online forex trading - Read to learn something more about forex trading from my perfect mistake -
Remember what did I say in one of my previous posts - http://the-forex-trading.blogspot.com/2006/05/learn-online-forex-trading-popular.html
"Discipline - Without it ,I'll loose money and I'll be responsible for it"
Here is an example of a trade in which I was making good profit..But, I ignored my rules.
I got greedy and ended up loosing money..How?? Lets analyse the trade together.
This trade was made on 29 or 30-May-06. Here it goes -
1. My general rule is to trade between 2 AM to 12 PM. I placed the trade at 6 PM.
So rule vioulation number 1. However I didn't get burned because of this. I was in negative
for sometime because of this. .
2. Look at the chart for EUR/USD especially in the areas marked in RED & Blue CIRCLE.
3. Look at the corresponding MACD indicator readings right under the candlestick chart.
4. Also look at the corresponding RSI indicator.
5. So, when the candlestick was in blue circle area, I placed the BUY trade on EUR/USD as RSI was near median line and MACD as also in buy area.
6. I also placed 37 pips stop loss.
7. And when the price was in red area I was at 35 pips profit
8. But what did I see? I saw that the MACD indicator was showing divergance.
Ideally what should I do at this time?? I should close the trade.
9. However, what did I do? I though let me run the trade for few pips more. I was aware that the currency will go in opposite direction soon. Still I let the trade run.
10. So, what happenned? the currency reversed as I guessed and I hit the stop loss and instead of gaining 35 pips, I lost 37 pips.
So, a trade which could had been profitable..But I lost it..Why? Because I wasn't disciplined for this trade.
So friends what did we learn with this trade??
Please post your comments on this trade..!!
Checkout tomorrow again to learn online forex trading
Comments:
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Yes you are right! Discipline is needed when trading and greediness in profits should not enter into your mind when trading or else you'll lose money! I have experienced it so many times and I lost a lot of money!!!
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