I see that the EUR/USD is dropping towards the support that has existed for over a decade. Do you think when it reaches this price area it will rebound up as it has done on all previous occasions?
Also, given the fact that this has happened on all previous occasions, could it be worth increasing the investment above the 5% of equity maximum than I would normally have?
Perhaps I could wait until it has started to climb , invest 5% at most and then add more once in profit. I could operate a stop/loss of £1 if it rises from the support it has done previously, meaning that the potential loss is tiny.
You remind me of myself when I first started trading/investing… I will address some of the not so obvious questions that you ought to ask yourself aside from the chart above.
1). Do i have the willpower to hold on to this trade till end/near end of green line?
2). If it hits my pre determined stop loss, what do i do next?
3). At ‘most’ 5% can sometimes turn into "I must be right, look at all these prev supports, ending up risking 50%+"
4). How much and where are you going to add to your existing position when trade goes into your favor? - if your ‘adds’ go into drawdown due to ur avg price being higher now & increased risk, what do I do now?
5). Since you have used the word ‘investment’, would Mr. Buffett approve this trade?
