WHAT I’VE LEARNED FROM YESTERDAY’S TRADE.
Good afternoon All from GMT+7…
Soo, everybody must have been wondering what happened last night, huh? In short, Price Action happened.
I can give you a bunch of fundamental reasons why, but those–again–are just opinions and rationalizations. They were not necessarily be the actual causes.
Price-Action wise, if you look at D1 Time Frame (see picture below), the mid-term trend is still Bullish. But after such relatively strong fall the day before, it’s very unlikely (not impossible!) that the Price will go up so strong reaching our TP in one single trading day. Usually, it takes two days or more. Hence, there was of course a chance for price to retrace after such a strong rally (i.e. 5 consecutive Green Candles in H1). But, a pullback that strong (i.e. back to around opening price of the day again), was to everybody’s surprise but not unexpected. As a trader we should always expect the unpredictable, which brings us to the technicality on how to anticipate it. There are 2 (two) ways we can do this. You can choose the way that suits your circumstances.
First: ‘Trailing Stop’ Method (for time-challenged traders)
This is done by moving SL first to recent Swing Low, then to BE or Break Even (if Price is already reaching 1/2 of TP, then to about 1/2 the distance of TP (if Price is already reaching more than 3/4 of TP) and then wait for the miracle for price to reach TP… The idea of this tactic is to secure our profit if you don’t have enough time to monitor the Price Action…
Second: Price Action Method (for intermediate to advanced traders)
This method requires you to have some knowledge and experience (and may be instinct) about candle patterns and resistance & support levels. In yesterday’s Price Action, after 5 hours of rally, we saw the green candle (at H1) was resisted by SMA 200 & SMA 50 (or by other levels you use), then followed by a forming of Red Candle afterwards. A pair of experience eyes would see this as a probable reversal pattern, or at least retracing pattern. Such trader would then have to decide whether to close the trade or wait. This is when the market realy tests how your greed and fear can stand with its volatility. The other side of the coin that the pattern was only fooling you; giving false pattern. But you would at least gain more money than the trailing stop method.
Which one did I use you may ask? I’m only a human and an independent trader just like most of us here. Yesterday was quite a tiring day for me because of other activities. I couldn’t monitor every hour till late at night, so I decided to use the first method. Bottom line: I was still able to earn couple hundreds pips from the trade.
Just like I mentioned above, at the end of the day, it’s your circumstances that would mostly shape your trading decisions. I will close this post by quoting a wise word from a wise man that I forgot his name (sorry, wise man 
):
“You’ve never really lost from a defeat if you can take valuable learning from it.”
Cheers and have a nice weekend…
