I’ve been trading forex for a few years now but mainly using EA’s/Robots. That’s behind me now.
Still consider myself brand new because I didn’t give it a serious effort until the last 6 months. Still not profitable maybe just under break even, but after reviewing my trading journal I’m starting to notice a pattern of bad habits I’ve picked up.
1. Always Trying to Catch the Reversal
I tend to place a limit order at a support/resistence level hoping it reverses. on the rare occasion it does and it continues the direction I want. But most of the time it’ll blow past it, touch my stop loss, then go the direction I want.
2. Bad Stop Loss Placement
Quite frequently whether on a reversal or a retest, my SL would get sniped then price quickly goes the direction I want. I always feel I’m giving it enough space but no matter what I get taken out.
3. Not Identifying the Higher Timeframe Trend Properly
If for example I’m trading USDJPY, I’ll see D1 in like a few month uptrend, so I target buys. But when I’m trading within the week it’s usually the opposite and again my SL gets taken out. Is looking at the D1 too big of a picture if I’m entering in my trades on H1/M15?
I’ve been digging in on babypips for the last 5 hours just reading. I’ve learned a lot that my emotions are also a problem, but the system I’m using right now clearly isn’t working.
I apologize if these are noob questions, but just wanted feedback what I can do to make changes for the better. I really don’t want to give up.
This is a great post, because it shows good self-awareness of trading habits and styles, plus a positive willngness to improve, plus the behaviours listed are probably shared with the majority of new traders, who we already know mostly lose money.
Reversals are low probability, high return trading patterns. Your wins need to be very big to counter the frequent losses. A bad response to this pressure is to set tighter and tighter stop-losses. A good response is to add to and compound winning positions, i.e. following the trend: but if following the trend is a good strategy, why weaken it by specifying that you can only initiate a trend-following position with a reversal trade?
See above.
See above, but yes, the ratio between the H1 time period and D1 is too large for D1 to be reliably relevant to H1 price behaviours.
Hey Tommor. Thanks for the feedback, it’s appreciated.
This past week I was definitely more self aware of the pattern. It was really blatent when I looked back at my past weeks trades and the 4 trade losing streak was because I though price would reverse long since it’s reaching a previous support level.
If D1 is too large and i’m entering based on H1/M15, what should the higher timeframe be for identifying the trend?
Welcome to Babypips. I won’t try to answer your questions one at a time because I agree with everything tommor said.
I think you should be looking at H4 rather than D1, for more relevance to your H1 timeframe, if that suits you (or even maybe stick to D1 for the higher timeframe but trade from H4 instead of H1?).
This is a great plan. However, it takes a lot of discipline to stick with one strategy while trying to filter out the other noise. Trading reversals is just too tempting sometimes.
I think you might enjoy my thread on break and retest, it is very similar to what you’re trying to do:
It’s great that you’re self-reflecting and learning from your trading journal! To improve, try focusing on trend alignment across multiple timeframes, using more precise stop-loss placement based on recent price action, and avoiding the temptation to catch reversals. Additionally, consider practicing patience and waiting for confirmed entries rather than chasing price.
I trade reversals. IMO, these are the best low risk, high reward opportunities out there, nothing else comes close. However, those who trade reversals call it cycle changes not trend reversals.
Trading cycle changes requires a different way of thinking vs trend following. It’s almost impossible to predict how long a cycle change will take, just it takes much longer than a pullback. And because a cycle change takes some time, the market will give multiple entry / exit opportunities, perfect for scaling in, adding to and scaling out of positions.
Often my initial entry (when scaling into a long position) goes into the red, the 2nd entry is almost always lower than the 1st (lowering the overall buy price) and the 3rd entry is often (but not always) somewhere in between the first 2. Sometimes a market can make a very wide base (cycle change) and provide a 4th or even 5th opportunity to enter which builds a larger position maximizing the opportunity as a wider base often means much higher potential to run a la “the wider the base, the higher in space”.
I personally don’t use stops and instead use position sizing to manage risk. I also trade very large cycles holding positions in a portfolio for years.
This is where cycles theory comes in. It’s much easier to see the fractal nature of markets as shorter cycles within larger cycles than timeframes. It’s not a problem to look at D1/H1/M15 as long as you’re able to track which cycle you’re looking at and how it fits into the larger cycles.
Your issues are common for new traders. Focus on aligning trades with higher timeframe trends (e.g., H4 if trading M15). Use wider stop-losses based on ATR for market noise. Avoid predicting reversals; trade confirmations. Backtest and journal consistently to refine your strategy and build confidence.
