Hi! I’m new to trading and after a lot of studying ive opened a demo account to try out diferent strategies. I’ve been demo trading for two weeks and im pretty happy with the results so far. But i need help to improve my trading. Today ive taken a trade that resulted in a loss, no big deal it happens, but what i wanted to know is if there was a way prevent that loss, i know its inevitable to have losses but since im inexperienced there my have been something that i over looked and that could have hinted me that that was a bad trade.
Ill explain what i look for before opening a position:
First i look at the direction of the market.
I look for support and resistance levels.
Then i wait for the price to retest that support or resistance.
If a candlestick shows a big shadow showing that price failed to break support/resistance, and if it closes above or below (depending if i want to go long or short) i take the trade.
I also have the 20EMA and 200EMA ploted on the chart to filter price and to use as support and resistance but its mainly just to filter noise.
In the image ill show you my “failed” short trade.
The image is a 15min EUR/USD chart for 24/01/2012, the green horizontal line is the resistance, price moved below it and then moved up to retest, when i saw the candlestick that i marked with the arrow and box, with the shadow of the candle and the close below the resistance i opened the short at the open of the next candle.
Here is the image:
(If the quality is bad ill try post a better one)
So can you guys give me some feedback on this trade? Is there was something on the chart that could tell me not to take trade, and whould you take this trade? Any reply is more than welcome im really trying to improve my trading.
I wish I knew what time this trade took place so I could see more of the overall picture here. Just using what i see here. Looks like we had a long bias based on the 200 MA and the 20 MA was even starting to bottom out here, not that those should be used as indicators or anything just my only references to whats happening around this price action. if this was an asian range swing could have been a Judas run then pushing up. If i am thinking that you are using classical price action why are we selling into a candle that closed bullish? Shouldn’t it be a bearish doji or inside bar? But from what i can see we were long bias, and you sold into a bull candle that had a higher high than the previous candles.I dont really trade this style so I am sure there are a lot more price action experts to chime in here.
I think you failed at number 1, the direction of the market now, at least in the short term is to the upside (look at my 1h chart)
Nothing wrong to go for shorts in the retest but you have to be aware of the trend. Actually I took the same trade but moved my SL to breakeven quickly, so no profit there.
Different ways to define trend. On another day it would of caused a reaction.
I would develop a definite entry method over using shadows. Non farm payroll week has less direction.
I think you’re doing fine
Ok, to get to the point, the short shoud be taken once the support line, which was broken, is re-tested, and a bear reaction candle is formed. This is a common conformation candle looked for when a line of lower support is broken and a short trade is being placed.
The bear reaction candle should show a signifficant bounce down from the support line once re-tested. This did not happen in the image posted.
