Panic Sets In!
Looking at the trade above, I called it perfectly right. Price went
up exactly to that key level of prior Support turned Resistance,
then went down, exactly according to plan.
But leave a trade over the weekend, and how often there is
The trade has gone horribly against me, on a Live account, I’m
losing a lot of money!!
Price has reversed to the Upside! It was 84% Trend Strength down
on Friday, now its 91.6% Trend Strength to the upside!!!
In a state of absolute panic I need to reverse my position, close
the trade and go Long!
Thats what I always do, thats what most traders do when they
The adage is true, ‘cut your losses short and let your winners run’
but that isn’t the same as continually reversing your positions
everytime you panic
The solution, first and foremost is to stop panicking
So lets look at this ‘tragic’ trade, just how bad is it?
Looking at the red shaded areas we can see how dire the situation
is - we see a Double Bottom and the price has duly reversed against me,
and we see the ominous Trend Strength confirming just how 'wrong’
the trade was. - and I was so sure this pair was bearish on H4 D1 and W1!
So now I have lost all confidence in my trading analysis
This is what usually happens in these situations. I just despair that I
will ever be consistently profitable, that charts will only ever be
psychologists ink blots to me, and I only ever read imaginary
patterns that don’t exist in reality
Sometimes it seems like that.
but after I calmed down, I didn’t close the trade
and I made another calm analysis of the current situation
What we see from this screenshot is that price was respecting the 200 SMA
on the way up, and seems to be respecting it on the way down
so all is by no means lost
and what about the current price action?
Firstly we note a very nice cross down over CCI, and just as promising
is that we have what looks like an Bearish Engulfing Pattern forming
Of course, if all this was happening at the 200 SMA level that would
be even more encouraging, but the present moment, it looks like
price is not planning to breach that highly significant MA
Maybe it will, but in the meantime I see no reason to panic, in fact,
panic is the very thing that blinds you to what might be really happening
Unfortunately this trade has dragged on for 12 days now, far longer than
most. but still far short of the 4 month touch I was getting trading the Dailies
In fact you can work it out - if 4 months is possible on D1, then 21 days must
be proportionally possible on H4
and I can probably cope with that, and it is preferable to dropping to H1.
If we do get a convincing close above 200SMA, that is surely the time
to ‘cut losing trades short’, but at the moment, there is nothing to suggest
that this is a losing trade
In trading, a clear head is the prime thing, when panic sets in, there
is nothing that can save you, you will be acting in blind desperation
Again, Isn’t this why is it so easy to double your demo account, but so hard
to avoid DD on your Live account?