Forex Tips: Never catch a falling bus
Forex Tips
If you look at the forex chart above. You may find the above scenario familiar.
Many a times, new traders always want to catch the bottom.
So that when it goes up, they will get plentiful of pips.
There’s nothing wrong with that idea. But the sad fact is, it is NEVER easy to catch a bottom / lowest point.
Forex Tips – In the chart, if you had tried catching the lowest point, you would have made several losses.
Eg. You enter on 1 point hoping that it is the rock bottom. But it wasn’t and went further down.
Now you had made a loss on that trade. And you want it back.
So subconsciously in your mind, you feel that it cannot go any further down anymore.
So you enter on the same pair again and this time at a lower point. (thinking that this MUST be the lowest point)
But it wasn’t and you made a loss again as it went down further.
Now you are REALLY PISSED OFF.
Forex Tips: Never catch a falling bus
Forex Tips
You will then have 2 choices:
1) You either totally quit trading that pair
2) You want to get back at that trade, so you continue choosing the “lowest point” thinking that you will surely get that right this time round and make back all the money you had loss.
Which ever choice you made, sorry but it’s wrong.
1) You shouldn’t quit trading that pair, instead you should relook the pair and to see If it is really going to get back up or is it going to continue down. So my advise is, if you feel that it is going down and the bearish trend and momentum is real strong. Then you should NO longer try to pick a bottom BUT to trade with the trend. The Down Trend.
2) You are now having a “Revenge” mentality. Which is very common with new traders. And you have to get rid of this habit of picking a bottom.
Forex Tips: Never catch a falling bus
Forex Tips
As mentioned, picking a bottom is never easy.
To pick a bottom,
1) You must have confluence supporting the move
2) You must have at least 2 profit taking point.
– The first profit taking point is only a short distance away. The reason behind it is that, in most cases, price will go up a little to hit your first profit taking target and then to head back further down.
Therefore, after your first profit taking target is hit. You should shift your stoploss to breakeven for your 2nd position (2nd profit taking target)
All and all. As mentioned repeatedly, try NOT to catch a falling bus. It is never easy.
Forex Tips
Why want to enter a trade that has the odds against you?
Why not enter a trade when the odds is WITH you? – Same trend.
This forex tips again may sound very basic. But it is also a core fundamental that you should take with for every trade.
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See you on the other side my friend,
Asia Forex Mentor
Ezekiel Chew
Asia #1 Forex Mentor
www.lifeofatrader.com
