How many times you opened a position and the currency turned the opposite direction right after the minute that you entered the market? It is so frustrating and it feels like someone did it on purpose against you. There is a reason why it happens and unfortunately, this gives the pros the opportunity to make money on the back of the amateurs.
Let’s look at the GBP/USD daily chart. Many traders opened a short position under 1.54. Why? Because that is what they have been told in TA courses- open a short position under a significant support and open a long position above a significant resistance. Well, the truth is that opening a position in such extreme usually leads to disaster. The secret is to find wiser spots for entering the market, and targeting to the support/resistance that everybody looks for. In this case, the trader had to see the channel 1.54-1.577 and open a short position around 1.57 and aim to 1.54. Be careful of opening a position in extreme levels- the pros are waiting for you there…
While opening short positions @ 1.57 and long positions @ 1.54, it is mandatory to fix a stop near to the entry point at least by 50 pips as breakouts can launch at any time.