Octavio; How do you handle a position?

The most important aspect of trading is the mental state. Unfortunately many of the traders focus them efforts on searching for a foolproof method or strategy: Moving averages crosses, RSI, Momentum, etc. Some pass the time asking to others:  Where goes the trend? Did you go long or short? Bernanke have announcement today? Is it a breakout? Still others seek answers regarding the Price direction, Reading or listening popular traders, about the opinion of where the market goes. All this information will only take you more confusing and complicated than it really can be. Taking a loss is something that really bothers you, take five consecutive losing trades can be very daunting, and manages to destabilize our mental state. On the other hand, achieving a reward for reckless action is one of the most expensive mistakes in this business. In my point of view, it must change the “You overshoot” or “Successful achievement” to “be highly probable and the risk are low” In the other words: to control your losses. Be realistic, you cannot control the prices, so, the only thing you can control is… yourself.  How? Being disciplined is the answer. Some of you will say: Yeah Octavio, but what is the trend in Eur/Usd? Where do you predict the Price goes? I just answer: I don’t know dude, I do not make predictions, but dude; you asking to the wrong person, ask that to a psychic or an astrologer, with magic, witchcraft and astrology are obscure things and I tend toward the scientific.

The following graphic shows how business AB = CD pattern buying the EUR / GBP. The first is to identify the points A and B evaluate if the point C that can meet a harmonic number, in this case 61.8% Fibonacci retracement.

But I do not understand. How exactly do you do Octavio?
Ok, it is best to explain it in steps (never found someone to describe how to act and to identify opportunities, therefore, I explain here, waiting to be useful).
Step One: Find the AB = CD pattern, find this form of bolt ray. In this particular case see the price coming down surpassing 0.8708; just look at it began to show the buying opportunity, I will explain briefly why:

a)      Many traders, executed sell orders for reasons such as: He broke the support line: sell, sell because it is strong.

b)       The stochastic indicator shows a sell signal (time before this can be obvious, but that cannot see in the image above)

c)        The trend is your friend and they entry short.

d)       They make a basic mistake ... they are selling cheap, and by my side, I buy low and sell high.

The ideal in this AB = CD pattern is to have the same number of candles on AB and CD, however, in this particular case; CD has fewer candles compared to AB. Right here is necessary to emphasize a very important aspect. The market is not perfect, so do not expect to find the perfect pattern.

The second step is: Place the Fibonacci tool and identify retracements with the harmonic numbers. In the graph above, you can look 61.8% the number right at the point C.

Step Three: Assess the level of D. That is, where is the potential for reverse zone?
Step Four: Identify if there is an area of demand to support our thesis (just the yellow paint area)
Step Five: Define where put our entry

Step Six: Evaluate where put our stop loss, just where we identified our pattern can fails.
Step 7: If the risk is good, executed our order as we planned.

 

In the chart above you can see the reversal area: 127.2% which is a harmonic number. It also shows the area where I planned to take profits or set my limit order.

Step Eight: Check the position, wait for 20 pips or more and move the stop-loss order to break even (this is highly recommended for beginners, I personally determined when is the right time to move my stop-loss order, and always in the direction of my trade).

The step nine is: The closing of the position; this one can be manually, using criteria such as time, i.e., the time when the markets are not opened, or the Friday before weekend. The ideal purpose is to close the position with stop-loss or limit order.
Step # 10: Evaluate and review: Why I won? And why I lose? That is, take the necessary notes. Remember that something very valuable is the experience.

Take care friends, I hope this was helpful. And consider this: If you are losing money in the markets. Stop to trading and invest in education.

Patience

Today, I share this probable bearish pattern on Kiwi dollar. see the chart below.

I suggest put attention to the yellow zone, because this is a Potential reverzal zone PRZ. I not have planned enter long at this time, because the risk reward isn't favorable to me. I only trade when have a favorable risk reward to my side. Patience is the key to be successful in my opinion. I never try to predict the markets... for me is impossible to do. Have a great day!

Why I short Eur/Usd?

I find this pattern and the time is near to trade it, obviously short. See the chart Below.

Why I entry short? Because at this time many novice traders try to follow the trend because they identify a break out upside. But the main reason is: I identify a oportunity and take it.

I show you my entry criteria in the chart below. 1hr. Is a good level for me to entry.

How you know if this can be works Octavio? Honestly... I don't know if this works, but I face a oportunity with low risk and probability to my side. So, I trade it following my strategy. I not have problems if this not works and simply, I pull the trigger.

Long, short, sideways...

Of course, is valid if you stay long or short in any pair and obtain income or success; all depends in the time frame you trade: In the chart below I illustrate 3 long trades in Aud/Usd, two winning and one lose trade.

 I enter a long position inside the green zones, maybe not was a big win, or in some cases just obtain break even trades. That is ok.

 In the chart above, we can see a green circle, just here, we enter long again because, a harmonic number appears and looks good, time after we see another opportunity; harmonic pattern, but this not works this time and is ok. But, how you win if the trend is bearish? I never follow the trend my friend… But of course, go short is a good idea, but depends what time frame you trade. See the chart below.

 Is a Daily chart… and the others were 1hr and 4hrs. What is the trend? Long, short, sideways, doesn’t matter if your follow your plan and make a proper analysis in a specific time frame. We can win some pips in the 1 hr chart goes long or going short in a daily chart analysis. I hope this was helpful.