Feb
12
Remember how few days ago I was involved in a trade that would stubbornly remain range-bound for hours on end? well, yesterday I experienced the very same thing all over again… Luckily this time around I had trailed my stop loss to breakeven quick so I wasn’t too worried about the lack of market momentum.
As it happened, I got a rather good entry and price swiftly moved in my direction for about +50 pips, where like I said I moved stop to entry levels. However, from that point on price became flat-lined and got stuck within a channel for the rest of the day. I woke up this morning to find out that I had been knocked out of the trade at +0 pips.
I think from these two last trades we can draw a fairly clear conclusion: market momentum is crucial! Chances are that if you’re running a steam-less position your stop loss will be hit sooner or later, as I unfortunately have experienced twice throughout the last few days.
Note to self: range-bound price action = baaaaaaaad!
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12 February, 9:42 pm
Looking at my chart, I noticed about 4 hours later after you were barely stopped out, it then dropped and hit your target.
I hate it when that happens!
12 February, 10:52 pm
Yeah man, it touched my stoploss for 2 pips and then cruised down to my target LOL.
Oh well…
-HECTOR-
12 February, 10:54 pm
Gah! If I had a dollar for everytime that happened to me: The price goes against me just enough to trigger my stop loss and as soon as it does it moves like grease lightening to my original take profit target. So frustrating.
13 February, 12:23 am
One thing concerning price movement aka momentum:
Let’s give that whole thing a twist:
Replace price movement with “time”…
Everybody is looking at price but what is even more important is the factor “time” within a movement takes place or in this case doesN’T take place.
We have a trading plan (Hector told us several times ;)
–> we sort of calculated a market movement.
when the expected behaviour of price doesn’t appear in a certain range of time than there’s sth. wrong with our assumptions.
For my own trading I exit trades e.g. in the 1H timeframe if price hasn’t moved like i expected within 2 candles (2h).
Just another perspective to look at the range-bound-thing. “Time” is the most underestimated factor in trading. :)
Cheers,
Benny996
13 February, 11:15 am
I absolutely agree Benny! Having a time scope in mind for each trade is just as important as knowing your stoploss or profit target levels. In my last two trades I have failed to address the “time limit” factor and as you can see I paid dearly for that (one loss and one breakeven trade).
Moral of the story: if after a sensible time span from entry price is showing no clear directional bias, you might want to consider at least moving stop to breakeven to offset the risk on that trade.
-HECTOR-
13 February, 8:26 pm
Hi Hector,
Can you explain your reasoning about not trading on Fridays as i find this statement absolutely ridiculous , there are plenty of Fridays where there are trades for trend or breakout type strategies that can be closed without having to hold over the weekend.
nick
13 February, 8:43 pm
Hi Nick.
Imagine you were a big dog who’s been riding a healthy intraweek trend for profits. The London market on Friday is coming to an end and you have two options: leave the trade open through the weekend and eat up the risk, or cash in your juicy commission prior closing the shop for the week.
What would you do?
PS: profit-takings (trend-reverse) can get nasty on Fridays and I have gotten burnt a number of times due to that.
-HECTOR-