Hello to all. I just recently finished the grade dedicated to teaching Fibonacci retracement and expansion tools. I tried to apply my knowledge to EURO/USD hypothetically without taking an actual position, just to see “how it would have gone”. I noticed that price went against me, as the picture demonstrates. Now, what I want to know is that is it purely out of luck, or did I make a mistake in my analysis, cause the price was trending up and I “entered” the position once price reached the golden area between 50-61%. I hope my question is clear, and thank you.
This is the price movement leading to the trade.
If your stop level is closer than your TP, you’ll lose more trades than you win. Just probabilities playing out. Looks to be about 25% win rate.
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@EmeraldEyes
Thank you, but if my TP is closer than my SL, doesn’t mean that I have a low risk/reward ratio ?
That doesn’t matter. All R:R ratios are equal. (1:3 is 25%, 1:1 is 50%)
It’s going to be a lot harder with a 25% win % because the losing streaks are going to be much larger. Maximum I’ll go is equal distance until very experienced.
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Yes. And a significantly better chance of ever trading profitably.
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@EmeraldEyes and @S_Jane_M . Could you please further explain to me how a R:R ratio of 1:3 is worse than 1:1 since, as I understand it and may very well be wrong, the risk in both ratios is the same but the reward in the former is greater. Thank you
The realistic answer is probably that you (like almost anyone!) need to try both and compare the outcomes for yourself, to truly appreciate it. But you need to do that over 200+ trades, not once and then be asking what went wrong!
The longer (?? better/worse ??) answer is that what often happens is that with the 1:3 trades, the price reaches the level where the 1:1 trade closes in profit, then reverses and the trade loses. That usually happens often enough, over 200+ trades, to give 1:1 a significantly better chance of net profits than 1:3. Don’t take my word for it. Test relentlessly, over BIG samples.
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They’re all equal in proportion but you’re going to have a much easier time with more equal distance.
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Ok, I get it now. As a beginner, I would have better chances of making 1:1 trades than 1:3, and as I grow more experienced, I should transition, or at least fiddle, with higher R:R. I assume the same is true for leverage. I should just emphasize that my question’s main focus was about whether I made a mistake and missed out on something that would have indicated that price was going down and not up.
I am still perplexed as to whether there were indications that price was gonna go downhill instead of up, all considered.
For the trade, na. You were good. Nothing wrong with buying a pullback. There’s no way to precisely trade to the perfect pip. It happens by accident 1% of the time.
If you do 1:1 for a while you should have a win rate of over 50% before leveling up.
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Really appreciate it. Thank you very much.
I don’t see the chart shows a consistent established uptrend.
I haven’t come across many traders who consistently make money on 30-minute time-frame trading - and no new traders at all.
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Don’t you think that after a period of consolidation, price was showing signals of a potential uptrend ?. Couldn’t I ride the trend that started from the swing low ?
I don’t say you could not or should not trade like that but I don’t see it as trend-following. For me, an uptrend is worth trading if price has risen to a new high, then fallen significantly to a swing low which is not below the prior swing low and then breaks through the level of the swing high. After that point, I would consider searching for an entry. So usually I only get in after the recovery from the second pull-back in upward price movement.
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